Decree No. 95/2008/ND-CP dated August 25, 2008 of the Government on the amendment, supplement of several articles of the Decree No. 16/2001/ND-CP dated 2 May 2001 on the organization and operation of finance leasing companies in Vietnam

DECREE

ON THE AMENDMENT, SUPPLEMENT OF SEVERAL ARTICLES OF THE DECREE NO. 16/2001/ND-CP DATED 2 MAY 2001 ON THE ORGANISATION AND OPERATION OF FINANCE LEASING COMPANIES IN VIETNAM

THE GOVERNMENT

- Pursuant to the Law on the Organisation of the Government dated 25 December 2001;

- Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated 12 December 1997 and the Law on the amendment, supplement of several articles of the Law on the State Bank of Vietnam No. 10/2003/QH11 dated 17 June 2003;

- Pursuant to the Law on the Credit Institutions No. 02/1997/QH10 dated 12 December 1997 and the Law on the amendment, supplement of several articles of the Law on the Credit Institutions No. 20/2004/QH11 dated 15 June 2004;

- Pursuant to the Law on Enterprises No. 60/2005/QH11 dated 29 November 2005;

- Upon the proposal of the Governor of the State Bank of Vietnam,

DECREES:

Article 1. To amend, supplement several articles of the Decree No. 16/2001/ND-CP dated 2 May 2001 of the Government on organization and operation of finance leasing companies as follows:

1. To amend Article 2 as follows:

"Article 2.

1. Finance leasing company is a non-banking credit institution, a Vietnamese legal entity. The finance leasing company shall be entitled to be established and operate in Vietnam in following forms:

a. Limited liability finance leasing company with 2 members and more;

b. One member limited liability finance leasing company;

c. Joint stock finance leasing company

2. The change of ownership, transformation of the form (type) of the finance leasing company shall be performed in accordance with applicable provisions of State Bank of Vietnam."

2. To amend Article 3 as follows:

"Article 3.

1. Joint venture finance leasing company is the finance leasing company established in Vietnam with capital contributed by Vietnam party (which includes one or more Vietnamese credit institutions, enterprises) and the foreign party (which includes one or more foreign credit institutions) on the basis of a joint venture contract. The joint venture finance leasing company shall be established in the form of a limited liability company with 2 members and more.

2. 100% foreign owned finance leasing company is the finance leasing company established in Vietnam with 100% of charter capital owned by one or several foreign credit institutions. The 100% foreign owned finance leasing company shall be established in the form of a limited liability company".

3. To amend Article 4 as follows:

"Article 4.

The assignment of contributed capital amount by the parties to a joint venture finance leasing company, 100% foreign owned finance leasing company shall be carried out in accordance with provisions of applicable laws and the guidance of the State Bank of Vietnam."

4. To supplement paragraphs 6, 7 and 8 to Article 7 as follows:

"6. Foreign credit institutions include banks, finance companies, leasing companies which are established under foreign laws. In case of a foreign leasing company, the balance of financial lease and loan must account for at least 70% of its total assets.

7. Home country for a foreign credit institution shall be the country where it is established.

8. Subsidiary of a finance leasing company

A company shall be considered as the subsidiary of the finance leasing company if it satisfies one of following cases:

a. It has over 50% of charter capital or total issued common shares owned by the finance leasing company;

b. The appointment of majority or all members of the Board of Directors and General Director (Director) of the company is subject to the own decision made by the finance leasing company;

c. The amendment of, supplement to the Charter of the organization and operation of the company is subject to the own decision made by the finance leasing company."

5. To amend point b, paragraph 1 of Article 8 as follows:

"b. Availability of sufficient legal capital in accordance with provisions of the Government at the time applying for the establishment of the finance leasing company."

6. To amend paragraph 2 of Article 8 as follows:

"2. Except for the conditions stated in paragraph 1 of this Article, the foreign party to a joint-venture finance leasing company or 100% foreign owned finance leasing company must satisfy following conditions:

a. To be permitted to engage in finance leasing activity in Vietnam by competent authority in accordance with provisions of applicable laws of its home country.

b. Availability of over 10 billion US dollars of total assets by the end of the year prior to the application time, unless otherwise provided for by the bilateral investment Agreement entered into by and between Vietnam and its home country."

7. To replace Articles 13, 14 and 15 by new Articles 13, 14 and 15 as follows:

"Article 13.

1. The opening of a branch, domestic and overseas representative office of a finance leasing company must be approved in writing by the State Bank of Vietnam. Conditions for application file, procedures for the opening of the branch, representative office of the finance leasing company shall be in accordance with Article 33 of the Law on Credit Institutions, guidance of the State Bank of Vietnam and provisions of current laws.

2. The establishment of a subsidiary of a finance leasing company for engaging in some areas of finance, banking, insurance shall be performed in accordance with the provisions of the State Bank of Vietnam and current laws.  

Article 14.

1. Board of Directors

a. Function of the Board of Directors is to manage finance leasing company, to make decision at its own discretion on behalf of the finance leasing company, to perform rights and obligations of the finance leasing company, except for issues subject to the authority of Shareholders' General Assembly (for joint stock finance leasing company) or of the owner (for one member limited liability finance leasing company) or of capital contributors (for limited liability finance leasing company with 2 members and more).

b. Board of Directors shall consist of at least 3 members, including prestigious persons who possess professional ethics, are knowledgeable about finance, banking activity. Chairman and other members of Board of Directors shall not be entitled to authorize any person who is not member of the Board of Directors to perform their duties, authorities.

c. Term of Board of Directors and its members shall be from 3 to 5 years in accordance with specific provisions in the Charter of organization and operation of the finance leasing company. Where a member of Board of Directors is additionally elected or elected as substitute for a member who is dismissed, relieved from office in the middle of his term, then the term of the additional or substitute member shall be the remaining period of the Board's term. Member of Board of Directors may be re-elected with unlimited number of terms and may be dismissed, relieved from his office at any time upon the decision of the agency competent to elect, appoint or nominate.

d. Board of Directors shall use the seal of the finance leasing company for performing its duties.

2. Controllers Committee

a. Controllers Committee shall be responsible for examining financial activity; supervising the compliance with the accounting regime, prudential ratio in the operation of the finance leasing company, performing the internal audit regime from time to time for each sector in order to make accurate assessment for business activity and financial situation of the finance leasing company.

b. Controllers Committee shall consist of at least 3 persons, of which at least one person is Chief of the Committee and at least a half of members of the Committee are specialized and responsible Controllers. Controllers must satisfy requirements of professional standard and professional ethics stipulated by the State Bank of Vietnam.

c. Controllers Committee has its assistant body and is entitled to use the internal inspection and control system of the finance leasing company to perform its duties.

d. Term of Controllers Committee and of its member shall be from 3 to 5 years according to the specific provisions in the Charter of the organization and operation of the finance leasing company. Where a Controller is additionally elected or elected as substitute for the Controller who is dismissed, relieved from office in the middle of his term, then the term of that additional or substitute controller shall be the remaining period of the Committee's term. The Controller may be re-elected with the unlimited number of terms.

3. General Director (Director)

a. Board of Directors shall appoint one of its members as General Director (Director) or outsource a General Director (Director). General Director (Director) of the finance leasing company shall be responsible to Board of Directors, to the law for the management of daily activities based on his duties, authorities in line with provisions of this Decree and other provisions of applicable laws. General Director (Director) shall be legal representative of the finance leasing company unless otherwise provided for in the Charter of the organization and operation of the finance leasing company.

b. Term of General Director (Director) shall not be in excess of 5 years as specifically stipulated in the Charter of the organization and operation of the finance leasing company. General Director (Director) may be reappointed with the unlimited number of terms.

c. General Director (Director), Deputy General Director (Deputy Director) of the Finance leasing company must satisfy standards as provided for in paragraph 2, Article 39 of the Law on Credit Institutions.

d. General Director (Director) of the finance leasing company shall not be permitted to be General Director (Director) or Chairman of Board of Directors of another credit institution, except for case where that credit institution is a subsidiary of the finance leasing company.

dd. Board of Directors shall provide in details for the structure, functions, duties of the assistant body to General Director (Director).

Article 15.

State Bank of Vietnam shall provide specific guidance on functions, duties, authorities and mode of election, appointment, dismissal, approval of members of Board of Directors, of Controllers Committee and General Director (Director) of the finance leasing company."

8. To amend point b, paragraph 1 of Article 16 as follows:

"b. To issue bonds, deposit certificates and other valuable papers with term of one year and more for mobilising funds from domestic and overseas organisations, individuals in accordance with applicable provisions of the State Bank of Vietnam;"

9. To supplement paragraph 9 to Article 16 as follows:

"9. Finance leasing company, of which charter capital is equal to the legal capital of a finance company shall be entitled to engage in some of following operations in accordance with the guidance of the State Bank of Vietnam"

a. To provide short term loan for supplement of current capital for the lessee

b. To perform the factoring activity for the lessee."

Article 2. Implementing provisions

1. This Decision shall be effective after 15 days since its publication in the Official Gazette.

2. Ministers, Heads of ministerial-level agencies, heads of Government's agencies, Chairman of People's Committee in provinces, cities under the central Government's management shall be responsible for the implementation of this Decree.