Law amending Law on Credit Institutions, Law No. 17/2017/QH14

LAW

Amending and Supplementing a Number of Articles of the Law on Credit Institutions^[2]

Pursuant to the Constitution of the Socialist Republic of Vietnam;

The National Assembly promulgates the Law Amending and Supplementing a Number of Articles of Law No. 47/2010/QH12 on Credit Institutions.

Article 1. To amend and supplement a number of articles of the Law on Credit Institutions

1. To add Point g to Clause 28, Article 4 as follows:

“g/ Other legal entities and individuals that have relations posing latent risks to operations of a credit institution or foreign bank branch as identified under the internal regulations of such credit institution or foreign bank branch or upon a written request of the State Bank through inspection or supervision of each specific case.”

2. To add Clauses 33, 34, 35, 36, 37, 38, 39 and 40 to Article 4 as follows:

“33. Early intervention means that the State Bank requests a credit institution or foreign bank branch to address the situation mentioned in Clause 1, Article 130a of this Law.

34. Special control means placing a credit institution under direct control by the State Bank under Section 1, Chapter VIII of this Law.

35. Plan on restructuring of a credit institution under special control (below referred to as restructuring plan) means one of the following plans:

a/ Recovery plan;

b/ Plan on merger, consolidation or assignment of all shares and capital contributions;

c/ Dissolution plan;

d/ Compulsory transfer plan;

dd/ Bankruptcy plan.

36. Recovery plan means a plan to apply measures to enable a credit institution under special control to address on its own the circumstance leading to its special control. 

37. Plan on merger, consolidation or assignment of all shares and capital contributions means a plan applied when a credit institution is merged or consolidated or there is an investor ready to receive all assigned shares and capital contributions of a credit institution under special control.

38. Compulsory transfer plan means a plan under which the owner, capital contributors and shareholders of a commercial bank under special control are required to transfer all their shares and capital contributions to the transferee.

39. Transferee means a domestic credit institution, a foreign credit institution or another investor that asks for and obtains permission of a competent state agency to receive compulsorily transferred shares and capital contributions.

40. Supporting credit institution means a credit institution designated to participate in managing, controlling, administering and supporting the organization and operation of a credit institution under special control.”

3. To amend and supplement Point b, Clause 1, Article 28 as follows:

“b/ The credit institution is split, separated, merged, consolidated, dissolved or bankrupt or undergoes a legal transformation;”

4. To amend and supplement Points c, dd, e and g, Clause 1, and Clauses 2 and 3, Article 29 as follows:

“c/ Location of the branch office of the credit institution;”

“dd/ Purchase, sale or transfer of capital contributions of the owner; purchase, sale or transfer of capital contributions of capital contributors; purchase, sale or transfer of shares of major shareholders; purchase, sale or transfer of shares which turns major shareholders into ordinary ones and vice versa.

In case of purchase, sale or transfer of capital contributions of a credit institution being a limited liability company, the purchaser or transferee must meet the conditions on owners or capital contributors prescribed in Articles 20, 70 and 71 of this Law;

e/ Suspension of business operation for at least 5 working days, except the case of operation suspension in force majeure circumstances;

g/ Listing of stocks on a foreign stock exchange.”

“2. Dossiers, order and procedures for approval of change specified in Clause 1 of this Article and the modification or supplementation of a license must comply with the State Bank’s regulations.

3. Adjustment of the charter capital or transfer of capital contributions of capital contributors of a people’s credit fund must comply with the State Bank’s regulations.”

5. To amend Point a, Clause 4, Article 29 as follows:

“a/ Modify or supplement its charter in conformity with the approved changes;”

6. To add Point h to Clause 1, Article 33 as follows:

“h/ Persons who have to bear responsibility under inspection conclusions on administratively sanctioning the credit institution or foreign bank branch with the highest fine for an act in the monetary and banking field violating the regulations on licenses, governance, management, shares, stocks, capital contribution, purchase of shares, credit extension, purchase of corporate bonds, and prudential ratios in accordance with the regulations on handling of administrative violations in the monetary and banking field.”

7. To amend and supplement Clause 3 of, and add Clause 4 to, Article 34 as follows:

“3. The Director General (Director), a Deputy Director General (Deputy Directors) or the holder of an equivalent title of a credit institution may not concurrently act as a member of the Board of Directors, Members’ Council or Control Board of another credit institution, unless such institution is a subsidiary of the credit institution. A Deputy Director General (Deputy Director) or the holder of an equivalent title of a credit institution may not concurrently act as a Director General (Director), Deputy Director General (Deputy Director) or the holder of an equivalent title of another enterprise.

4. The Chairperson of the Board of Directors or Members’ Council, and Director General (Director) of a credit institution may not concurrently act as the Chairperson or a member of the Board of Directors, the Chairperson or a member of the Members’ Council, the President, Director General (Director), a Deputy Director General (Deputy Director) or the holder of an equivalent title of another enterprise.”    

8. To add Clause 4 to Article 39 as follows:

“4. A credit institution shall notify in writing the State Bank of information specified in Clause 1 of this Article within 7 working days after it receives such disclosed information under Clause 2 of this Article.”

9. To add Clause 2a below Clause 2, Article 45 as follows:

“2a. To appoint, relieve from duty, discipline, suspend the work of and decide on salaries and other benefits of title holders in the internal audit section.”

10. To amend and supplement Point c of, and add Point d to, Clause 1, Article 50 as follows:

“c/ Possessing a university or postgraduate degree;

d/ Having at least 3 years working as a manager or an executive officer of a credit institution, or at least 5 years working as a manager or an executive officer of an enterprise operating in the financial, banking, accounting or audit field or an another enterprise with equity at least equal to the legal capital required for each type of credit institution, or at least 5 years working directly in the finance, banking, accounting or audit section.”

11. To amend and supplement Point d, Clause 4, Article 50 as follows:

“d/ Having at least 5 years working as an executive officer of a credit institution or Director General (Director) or a Deputy Director General (Deputy Director) of an enterprise with equity at least equal to the legal capital required for each type of credit institution and at least 5 years working directly in finance, banking, accounting or audit, or having at least 10 years working directly in finance, banking, accounting or audit;”

12. To amend and supplement Clause 6, Article 52 as follows:

“6. A joint-stock credit institution must have at least 100 shareholders and is not limited in the number of shareholders, except commercial banks under special control and currently implementing a compulsory transfer plan as specified in Section 1dd, Chapter VIII of this Law.”

13. To amend and supplement Point c, Clause 1, Article 54 as follows:

“c/ To take responsibility before law for the lawfulness of capital contributed to and shares purchased or received through transfer from the credit institution; to refrain from using credit loans granted by the credit institution or foreign bank branch to purchase shares or receive transferred shares of the credit institution; to refrain from contributing capital to or purchasing shares of the credit institution in the name of another individual or legal entity or institution in any form, except the case of mandate in accordance with law;”

14. To amend and supplement Point a, Clause 2, and Clause 3, Article 55 as follows:

“a/ It owns shares of a credit institution under special control under a restructuring plan approved by a competent authority; it owns shares of a credit institution in a subsidiary or an affiliated company specified in Clauses 2 and 3, Article 103, and Clause 3, Article 110, of this Law;”

“3. A shareholder and his/her/its affiliated persons may not own over 20% of the charter capital of a credit institution, except the cases specified at Points a, b and c, Clause 2 of this Article. A major shareholder of a credit institution and his/her/its affiliated persons may not own shares accounting for 5% or more of the charter capital of another credit institution.”

15. To amend and supplement Point c, Clause 2, Article 56 as follows:

“c/ A member of the Board of Directors or Control Board or the Director General (Director) transfers his/her shares to other investors for implementing the restructuring plan approved by a competent authority.”

16. To amend and supplement Clause 5, Article 63 as follows:

“5. To appoint, relieve from duty, discipline, suspend the work of, and decide on salaries and other benefits of, the Director General (Director), Deputy Directors General (Deputy Directors), Chief Accountant, Secretary of the Board of Directors and other managers and executive officers under the internal regulations of the Board of Directors.”

17. To amend and supplement Clause 2, Article 75 as follows:

“2. The Chairperson and other members of the Board of Directors, the Head and other members of the Control Board and the Director General (Director) of a cooperative bank or people’s credit fund must satisfy the criteria on professional qualifications and ethics and be proficient in banking operations under the State Bank’s regulations and on the list approved by the State Bank.

The State Bank shall specifically prescribe the procedures and dossiers for approving the list of persons expected to be elected or appointed as specified in this Clause.”

18. To replace the phrase “must be registered” with the phrase “must be sent” in Clause 3, Article 31 and Clause 2, Article 77; to replace the phrase “management of security assets” with the phrase “management of debts and exploitation of assets” in Clause 3, Article 103 and Clause 3, Article 110.

19. To amend and supplement Clauses 2 and 6 of, and add Clause 7 to, Article 126 as follows:

“2. Clause 1 of this Article is not applicable to people’s credit funds and cases of credit extension in the form of issuance of credit cards to individuals.

Limits of credit cards for individuals mentioned in Clause 1 of this Article must comply with regulations of the State Bank.”

“6. Credit institutions and foreign bank branches may not extend credit for contribution of capital to or purchase of shares of credit institutions.

7. Credit extension mentioned in Clauses 1, 3, 4, 5 and 6 of this Article covers also the purchase of or investment in corporate bonds.”

20. To amend and supplement Point b, Clause 1 of, and add Clause 5 to, Article 127 as follows:

“b/ The Chief Accountant of the credit institution or foreign bank branch; the Chairperson and other members of the Board of Directors, the Head and other members of the Control Board, Director, Deputy Directors and holders of other equivalent titles of the people’s credit fund;”

“5. The total outstanding credit specified in Clause 2 of this Article includes also the total amount of purchased and invested bonds issued by the entities specified at Points a, c and d, Clause 1 of this Article; the total outstanding credit specified in Clause 4 of this Article includes also the total amount of purchased and invested bonds issued by the entities specified at Point e, Clause 1 of this Article.”

21. To amend and supplement Clauses 4, 5 and 7, Article 128 as follows:

“4. The total outstanding credit specified in Clauses 1 and 2 of this Article includes the total amount of purchased and invested bonds issued by clients and affiliated persons of such clients.

5. Limits and conditions for credit extension for stock and corporate bond investment and trading by credit institutions and foreign bank branches shall be prescribed by the State Bank.”

“7. In special cases, in order to perform socio-economic tasks, if the extension of syndicated credit by credit institutions and foreign bank branches fails to meet capital needs of a single client, the Prime Minister may decide on a maximum credit extension level exceeding the limit specified in Clause 1 or 2 of this Article on a case-by-case basis.

The Prime Minister shall prescribe the conditions, order and dossiers for requesting approval of the maximum credit extension level exceeding the limit specified in Clause 1 or 2 of this Article.”

22. To add Clause 6 to Article 129 as follows:

“6. The level of capital contribution and share purchase specified in Clauses 1 and 3 of this Article excludes that of fund management companies being subsidiaries or affiliated companies of a commercial bank or finance company to/from an enterprise sourced from the funds managed by such company.”

23. To amend and supplement Point e, Clause 1, Article 130 as follows:

“e/ The ratio of purchased or invested government bonds or government-guaranteed bonds.”

24. To annul Clause 5, Article 130.

25. To add Article 130a below Article 130 as follows:

“Article 130a. Application of early intervention to credit institutions and foreign bank branches

1. The State Bank shall consider applying early intervention to a credit institution that falls into one of the following cases but is not yet placed under special control under Article 145 of this Law:

a/ Failing to maintain the solvency ratio specified at Point a, Clause 1, Article 130 of this Law for 3 consecutive months;

b/ Failing to maintain the capital adequacy ratio specified at Point b, Clause 1, Article 130 of this Law for 6 consecutive months;

c/ Being ranked below average under regulations of the State Bank.

2. The State Bank shall consider applying early intervention to a foreign bank branch when the latter falls into one of the cases specified at Points a, b and c, Clause 1 of this Article.

3. Within 30 days after receiving an early intervention notice of the State Bank, a credit institution or foreign bank branch shall report to the State Bank on the situation, reasons for and plan to remedy such situation as specified in Clause 1 of this Article and organize the implementation of such plan. The State Bank may, if deeming it necessary, request in writing the credit institution or foreign bank branch to modify the remedy plan.

The time limit for implementation of a remedy plan is 1 year from the date of receipt of an early intervention notice of the State Bank.

4. A remedy plan must include one or several of the following measures:

a/ Narrowing down the contents and scope of operation and limiting big transactions;

b/ Increasing the charter capital or allocated capital; intensifying the holding of assets of high liquidity; selling or transferring assets and taking other measures to meet the safety requirement for banking operations;

c/ Limiting the payment of dividends and distribution of profits;

d/ Cutting operation and management expenses; limiting the payment of remunerations, wages and bonuses to managers and executive officers;

dd/ Increasing risk management; reorganizing the management apparatus and reducing staff;

e/ Other measures prescribed by law.

5. In case a credit institution or foreign bank branch fails to formulate a remedy plan under Clause 3 of this Article or upon the expiration of the time limit for remedy plan implementation but the situation specified in Clause 1 of this Article is not yet remedied, the State Bank shall, depending on the nature and level of the risk, request the credit institution or foreign bank branch to take one or several of the measures specified in Clause 4 of this Article.

6. The State Bank shall issue a document on termination of the application of early intervention after the credit institution or foreign bank branch completely remedies the situation specified in Clause 1 of this Article or when the credit institution is placed under special control.

7. The State Bank shall prescribe in detail this Article.”

26. To add Point c to Clause 2, Article 141 as follows:

“c/ Renaming of the branch of the credit institution; suspension of business operation for under 5 working days; listing of stocks on the domestic securities market.”

27. To amend and supplement Section 1, Chapter VIII as follows:

“Section 1

SPECIAL CONTROL   

Article 145. Cases where a credit institution is placed under special control

1. A credit institution shall be placed under special control when falling into one of the following cases:

a/ It becomes or is likely to become insolvent under regulations of the State Bank;

b/ It has a cumulative loss exceeding 50% of the value of its charter capital and reserve funds stated in the latest audited financial statement;

c/ It fails to maintain the capital adequacy ratio prescribed at Point b, Clause 1, Article 130 of this Law for 12 consecutive months or has this ratio falling below 4% for 6 consecutive months;

 d/ It has been ranked “poor” under the State Bank’s regulations for 2 consecutive years.

2. When facing the danger of becoming insolvent, a credit institution shall promptly report to the State Bank on the actual situation, reasons, measures already taken and measures to be taken to remedy the situation and recommendations and proposals.

Article 145a. Decisions to place credit institutions under special control

1. The State Bank shall consider and decide to place a credit institution falling into the case specified in Clause 1, Article 145 of this Law under special control and form a special control board to control the operation of such credit institution.

2. The State Bank shall prescribe the following contents:

a/ Special control form and duration, extension of special control duration, termination of special control, disclosure of information about special control of the credit institution;

b/ Composition, number and structure of members and operation mechanism of the special control board suitable to the special control form as well the actual situation of the credit institution under special control.

3. From the date the State Bank places a credit institution under special control, principals and interests of refinancing loans granted by the State Bank to such credit institution shall be converted into a special outstanding loan.

Article 145b. Termination of special control

The State Bank shall consider and decide to terminate the special control of a credit institution in one of the following cases:

1. The credit institution under special control has remedied the situation leading to its special control and satisfied the prudential ratios prescribed in Article 130 of this Law;

2. During the special control duration, the credit institution under special control is merged or consolidated into another credit institution or dissolved;

3. After a judge appoints a receiver or an asset management and liquidation business to carry out the procedures for bankruptcy of the credit institution under special control.

Article 146. Competence to decide on restructuring of credit institutions under special control

1. The Government is competent:

a/ To decide on the policy on restructuring under plans on dissolution, compulsory transfer or bankruptcy of credit institutions under special control;

b/ To approve plans on compulsory transfer or bankruptcy of credit institutions under special control;

c/ To decide to apply special measures to ensure safety for the credit institution system, social order and safety when handling credit institutions under special control and report them to the National Assembly at the nearest session.

2. The Prime Minister is competent:

a/ To decide on the policy on restructuring under plans on recovery, merger, consolidation or assignment of all shares or capital contributions of commercial banks, cooperative banks or finance companies under special control;

b/ To approve plans on recovery, merger, consolidation or assignment of all shares or capital contributions of commercial banks, cooperative banks or finance companies under special control;

c/ To decide on grant of special loans with a preferential interest rate of 0% by the State Bank to credit institutions under special control.

3. The State Bank is competent:

a/ To decide on the policy on restructuring under plans on recovery, merger, consolidation or assignment of all capital contributions of people’s credit funds or microfinance institutions;

b/ To approve plans on recovery, merger, consolidation or assignment of all capital contributions of people’s credit funds or microfinance institutions, except the case of decision on grant of special loans specified at Point c, Clause 2 of this Article;

c/ To decide on purchase by the Vietnam Deposit Insurance of long-term bonds of supporting credit institutions.

Article 146a. Tasks and powers of the State Bank toward credit institutions under special control

1. To process recommendations of special control boards specified in Article 146b of this Law.

2. To decide to apply one or several of support measures specified in Clauses 1 and 2, Article 148b of this Law before restructuring plans are approved, except the case of decision on grant of special loans specified at Point c, Clause 2, Article 146 of this Law.

3. To appoint chairpersons and other members of Boards of Directors, chairpersons and other members of Members’ Councils, heads and other members of Control Boards, Directors General (Directors), Deputy Directors General (Deputy Directors) and holders of equivalent titles of credit institutions under special control.

4. To decide on or modify operation contents, scope and networks of credit institutions under special control.

5. To decide not to apply or terminate the application of measures to recover the solvency of credit institutions implementing approved bankruptcy plans.

6. To decide on grant of special loans by the State Bank under Point a, Clause 1, Article 146d of this Law, except the case of decision on grant of special loans specified at Point c, Clause 2, Article 146 of this Law.

7. To request owners, capital contributors and shareholders of credit institutions under special control to:

a/ Report on the use of stocks and capital contributions;

b/ Refrain from transferring stocks and capital contributions;

c/ Refrain from using stocks and capital contributions as security assets;

8. To perform other tasks and exercise other powers in accordance with this Law.

Article 146b. Tasks and powers of a special control board

1. To direct the Board of Directors, Members’ Council and Director General (Director) of the credit institution under special control to perform the following:

a/ Reviewing and adjusting the organizational structure, network and business operation of the credit institution and concentrating on the recovery of non-performing loans and disposal of security assets;

b/ Reducing expenses, including reducing interest rates of deposits and bonds with high interest rates and high rentals under asset hire and asset hire-purchase contracts.

2. Directing the credit institution under special control in formulating and implementing its restructuring plan in accordance with this Law.

3. Suspending one or several of business operations of the credit institution under special control if such operations may cause more risks to the credit institution or are unconformable with the approved restructuring plan.

4. Terminating or suspending the right to govern, administer and control the credit institution under special control of the chairperson and members of the Board of Directors, chairperson and members of the Members’ Council, head and members of the Control Board, the Director General (Director), Deputy Directors General (Deputy Directors) and holders of equivalent titles of the credit institution and proposing the State Bank to appoint other persons in replacement of these persons.

5. Requesting the Board of Directors, Members’ Council and Director General (Director) to relieve from duty or suspend the work of persons who commit violations of law or fail to comply with the approved restructuring plan or fail to obey its directions.

6. Proposing the State Bank to decide on change of the form, extension of the duration or termination of the special control; provision, extension of the term or recovery of special loans for the credit institution; liquidation of assets or revocation of the license of the credit institution.

7. Other tasks and powers as prescribed by this Law.

Article 146c. Responsibilities of a credit institution under special control and its owner, capital contributors, shareholders, Board of Directors, Members Council, Control Board and Director General (Director)

1. A credit institution under special control and its owner, capital contributors and shareholders shall:

a/ Formulate a restructuring plan at the request of the special control board;

b/ Implement the restructuring policy and plan decided and approved by a competent authority;

c/ Abide by decisions and requests of the State Bank specified in Article 146a of this Law;

d/ Abide by decisions and requests of the special control board specified in Article 146b of this Law.

2. The Board of Directors, Members Council, Control Board and Director General (Director) of a credit institution under special control shall:

a/ Discharge the responsibilities prescribed in Clause 1 of this Article;

b/ Govern, control and administer the business operation and guarantee safety of assets of the credit institution.

Article 146d. Special loans

1. A credit institution under special control may borrow special loans from the State Bank, Vietnam Deposit Insurance, Vietnam Cooperative Bank and other credit institutions for the following purposes:

a/ Having additional liquidity when it faces the danger of insolvency or falls into insolvency, thus threatening the stability of the credit institution system during the special control, including the case where it is implementing the approved restructuring plan;

b/ Supporting its recovery under the approved recovery or compulsory transfer plan.

2. Special loans shall be repaid prior to all other debts of the credit institution, including debts with security assets, in the following cases:

a/ When debts are due, except where the restructuring plan is not yet approved or a change in the restructuring plan is not yet approved;

b/ When the credit institution is dissolved or falls bankrupt.

3. The State Bank shall prescribe in detail the provision of special loans to credit institutions under special control.

Article 146dd. Governance, administration and operation of credit institutions under special control

1. The operation contents and scope of credit institutions under special control shall be decided by the State Bank, except the case specified in Clause 3, Article 146b of this Law.

2. While under special control, a credit institution is not required to comply with the provisions of Articles 128, 130, 131 and 140 of this Law but shall abide by the State Bank’s decisions on specific cases. In case the money amount to be set aside as a risk provision is larger than the difference between expenses for and revenues from business operations in a year (excluding the risk provision temporarily set aside in the year), the risk provision must be at least equal to such difference.

3. Credit institutions under special control are not required to have compulsory reserves.

4. Credit institutions under special control shall be exempted from paying deposit insurance premiums and membership fee of the fund for safety assurance of the system of people’s credit funds.

5. The organization of the Shareholders’ General Meetings and disclosure of information by credit institutions under special control shall be carried out at the request of the State Bank for the purpose of ensuring safety of the credit institution system.

6. The number of members and term of office of Boards of Directors, Members’ Councils and Control Boards of credit institutions shall be decided by the State Bank to suit practical operations of such credit institutions.

In case the term of office of the Board of Directors, Members’ Council or Control Board of a credit institution under special control has expired but such credit institution has neither yet elected nor appointed a new Board of Directors, Members’ Council or Control Board, the existing one shall continue governing and controlling the credit institution in accordance with law.”

28. To add Sections 1a, 1b, 1c, 1d, 1dd and 1e to Section 1, Chapter VIII as follows:

“Section 1a

ASSESSMENT OF ACTUAL SITUATION AND DECISION ON RESTRUCTURING OF CREDIT INSTITUTIONS UNDER SPECIAL CONTROL

Article 147. Overall assessment of the actual situation of credit institutions under special control

1. The special control board shall request the credit institution under special control to hire an independent audit firm to review and assess its actual financial status and determine the real value of its charter capital and reserve funds according to specific contents requested by the special control board. The hire of an independent audit firm must be completed within 30 days after the issuance of the decision to form the special control board.

In case the credit institution under special control fails to hire an independent audit firm within the prescribed time limit, the special control board shall designate such an independent audit firm.

2. Within 4 months after the issuance of the decision to form the special control board, the credit institution under special control shall complete and send to the special control board a report on overall self-assessment of its actual situation and propose its restructuring.

3. Within 5 months after the issuance of the decision to form the special control board, the special control board shall complete the overall assessment of the actual situation of the credit institution under special control, even when such credit institution fails to complete the self-assessment under Clause 2 of this Article.

4. The overall assessment of the actual situation of credit institutions under special control other than people’s credit funds prescribed in Clauses 2 and 3 of this Article shall be based on reports of independent audit firms specified in Clause 1 of this Article.

5. Contents of overall assessment of the actual situation of a credit institution under special control shall be decided by the special control board but must include at least the following:

a/ Financial status and real value of charter capital and reserve funds;

b/ Actual state of organization, governance, administration and information technology system;

c/ Actual operations and business activities.

6. Expenses for hiring an independent audit firm and other expenses for the overall assessment of the actual situation of a credit institution under special control shall be paid by such credit institution and accounted as its expenses.

Article 147a. Proposals and decisions on restructuring credit institutions under special control

1. Based on the overall assessment of the actual situation of a credit institution, the special control board shall propose the restructuring of the credit institution to the State Bank.

2. Within 60 days after receiving a proposal of the special control board, the State Bank shall consider and decide on the restructuring of the credit institution under special control or submit such proposal to the Government or Prime Minister for consideration and decision according to its/his/her competence prescribed in Article 146 of this Law.

3. Within 30 days after receiving a proposal from the State Bank, the Government or Prime Minister shall consider and decide on the restructuring of the credit institution under special control according to its/his/her competence prescribed in Article 146 of this Law.

Section 1b

PLANS ON RECOVERY OF CREDIT INSTITUTIONS UNDER SPECIAL CONTROL

Article 148. Formulation and approval of recovery plans   

1. Within 60 days after receiving a decision on its restructuring under a recovery plan, a credit institution under special control shall complete the formulation and submission of such recovery plan to the special control board.

2. Within 30 days after receiving a recovery plan of the credit institution under special control, the special control board shall assess the feasibility of such plan and report it to the State Bank.

For a recovery plan of a people’s credit fund, the special control board shall coordinate with the Vietnam Deposit Insurance or Vietnam Cooperative Bank in assessing its feasibility; for a recovery plan of a microfinance institution or finance company, the special control board shall coordinate with the Vietnam Deposit Insurance in assessing its feasibility.

3. Within 60 days after receiving a report and a recovery plan submitted by the special control board, the State Bank shall consider and approve such plan or submit it to the Prime Minister for approval according to his/her competence prescribed in Article 146 of this Law.

4. In case a credit institution under special control fails to complete the formulation of a recovery plan under Clause 1 of this Article or its recovery plan is not approved under Clause 3 of this Article, the State Bank shall consider and decide or propose the Government or Prime Minister to decide on merger, consolidation, assignment of all shares or capital contributions, dissolution, compulsory transfer or bankruptcy of such credit institution according to its/his/her competence prescribed in Article 146 of this Law.

Article 148a. Contents of recovery plans   

1. A recovery plan must have at least the following contents:

a/ A plan on charter capital increase and time limit for implementation of such plan in case the real value of charter capital is lower than the legal capital; the capital adequacy ratio falls below the level prescribed by the State Bank; or the State Bank requests charter capital increase to guarantee operation safety for the credit institution;

b/ A plan on business operation during the recovery period;

c/ A plan on organizational structure, governance and administration;

d/ A plan on settlement of financial problems and weaknesses and non-performing loans, disposal of security assets and measures to remedy violations;

dd/ A plan on scheduled repayment of deposits of clients being legal entities, deposits and loans of other credit institutions; a plan on handling of borrowed special loans, including special loans specified in Clause 3, Article 145a of this Law;

e/ Support measures specified in Article 148b of this Law which need to be taken;

g/ Implementation schedule and period of the recovery plan.

2. In case the State Bank plans to designate a supporting credit institution, in addition to the contents specified in Clause 1 of this Article, the credit institution under special control shall coordinate with the supporting credit institution in additionally making the following plans:

a/ Plan of the supporting credit institution to support the credit institution under special control; a plan on support for the supporting credit institution;

b/ Plan on payment of wages, remunerations, bonuses and other entitlements to persons dispatched to participate in the governance and administration of the credit institution under special control;

c/ Plan on payment of wages to employees of the credit institution under special control during the special control period.

Article 148b. Measures to support the implementation of a recovery plan

1. For a credit institution under special control being a commercial bank, cooperative bank or finance company, one or several of the following support measures may be applied:

a/ Selling non-performing loans without security assets or with distrained security assets or without valid records and documents to institutions with wholly state-owned charter capital established by the Government to settle non-performing loans of credit institutions;

b/ Borrowing special loans with the lowest concessional interest rate of 0% from the State Bank;

c/ Incrementally accounting as an expense the difference between the book value of debts, receivables, investments, capital contributions and purchased shares currently accounted in the accounting balance sheet and selling prices of and provisions set aside for these amounts as suitable to the financial status of the credit institution under special control for up to 10 years;

d/ Enjoying a zero or reduced interest rate of refinancing loans or special loans of the State Bank;

dd/ A finance company may borrow special loans with the lowest concessional interest rate of 0% from the Vietnam Deposit Insurance’s professional reserve fund;

e/ Receiving deposits or borrowing loans at a concessional interest rate from the supporting credit institution;

g/ Purchasing debts and corporate bonds held by the supporting credit institution and currently classified as standard debts under regulations of the State Bank;

h/ Purchasing or investing in an information technology system with amounts of money exceeding the ratio prescribed in Article 140 of this Law;

i/ Other measures under the approved recovery plan.

2. For a credit institution under special control being a people’s credit fund or micro-finance institution, one or several of the following support measures may be applied:

a/ The measure specified at Point a, Clause 1 of this Article;

b/ Borrowing special loans at the lowest concessional interest rate of 0% from the Vietnam Deposit Insurance’s professional reserve fund;

c/ A micro-finance institution may borrow special loans at the lowest concessional interest rate of 0% from the State Bank;

d/ A people’s credit fund may borrow special loans at the lowest concessional interest rate of 0% from the Vietnam Cooperative Bank’s fund for safety assurance of the system of people’s credit funds;

dd/ Other measures under the approved recovery plan.

3. The Vietnam Deposit Insurance may account as a decrease of the professional reserve fund the money amounts used for settling irrecoverable special loans.

4. The Vietnam Cooperative Bank may account a decrease of the fund for assurance of safety for the system of people’s credit funds the money amounts used for settling irrecoverable special loans.

Article 148c. Implementation of a recovery plan

1. The special control board shall direct, inspect and supervise the credit institution under special control in implementing its approved recovery plan.

2. At the request of the special control board, the State Bank shall decide or propose the Prime Minister to decide on the following:

a/ Modifying or supplementing the recovery plan, including extending the time limit for implementation of the recovery plan;

b/ Terminating the implementation of the recovery plan for switching to the plan on merger or consolidation of the credit institution or assignment of all shares or capital contributions at the request of the credit institution under special control filed with the special control board.

3. The State Bank shall issue a decision to designate a supporting credit institution under the approved recovery plan.

4. If finding that the credit institution under special control is unable to recover under the approved recovery plan or fails to remedy the situation leading to its special control upon the expiration of the time limit for implementation of the approved recovery plan, the State Bank shall decide or propose the Government or Prime Minister to decide on merger, consolidation, assignment of all shares or capital contributions, dissolution, compulsory transfer or bankruptcy of the credit institution according to its/his/her competence prescribed in Article 146 of this Law.

Article 148d. Conditions on a supporting credit institution

A supporting credit institution must satisfy the following conditions:

1. Having been operated at a profit for at least 2 years prior to the time of being considered for designation to render support according to its independently audited financial statements;

2. Satisfying the prudential ratios prescribed in Article 130 of this Law;

3. Having the number and structure of members of its Members’ Council, Board of Directors and Control Board in accordance with law;

4. Having specialized internal control and internal audit systems in compliance with Articles 40 and 41 of this Law.

Article 148dd. Rights and obligations of a supporting credit institution

1. To coordinate with the credit institution under special control in formulating a recovery plan under Clause 2, Article 148a of this Law.

2. To select, recommend and appoint persons who are fully capable and experienced and satisfy the conditions for participating in the governance, control and administration of the credit institution under special control at the request of the State Bank.

3. To organize, manage and supervise the organization and operation of the credit institution under special control under the approved recovery plan; to propose modifications and additions to the approved recovery plan to the special control board.

4. To grant loans to or make deposits at concessional interest rates at the credit institution under special control under the approved recovery plan.

5. To sell debts or corporate bonds currently classified as standard debts under regulations of the State Bank to the credit institution under special control at the request of the State Bank.

6. To redeem its debts or corporate bonds sold under Clause 5 of this Article at the request of the State Bank.

7. To borrow refinancing loans at the minimum concessional interest rate of 0% and reduce by 50% its compulsory reserve under the approved recovery plan.

8. To be subject to no limitations on the ratio of purchased or invested government bonds or government-guaranteed bonds prescribed at Point e, Clause 1, Article 130 of this Law.

9. To apply the risk coefficient of 0% to loans and deposits at the credit institution under special control when calculating the capital adequacy ratio, and classify such loans and deposits as standard debts.

10. To account as operation expenses wages, remunerations and bonuses paid to persons dispatched to participate in the governance, control and administration of the credit institution under special control.

11. To issue long-term bonds to the Vietnam Deposit Insurance under decisions of the State Bank.

12. To apply other support measures decided by the State Bank according to its competence.

Section 1c

PLANS ON MERGER, CONSOLIDATION, ASSIGNMENT OF ALL SHARES OR CAPITAL CONTRIBUTIONS OF CREDIT INSTITUTIONS UNDER SPECIAL CONTROL

Article 149. Merger, consolidation, assignment of all shares or capital contributions of credit institutions under special control

1. The formulation and approval of a plan on merger, consolidation or assignment of all shares or capital contributions of a credit institution under special control shall be carried out when the following conditions are satisfied:

a/ The merger, consolidation or assignment of all shares or capital contributions is decided under Article 147a of this Law or one of the cases of merger, consolidation or assignment of all shares or capital contributions specified in Clause 4, Article 148, Clauses 2 and 4, Article 148c of this Law occurs;

b/ There is a credit institution willing to be merged or consolidated with the credit institution under special control or to receive all assigned shares or capital contributions and satisfying the conditions prescribed by law;

c/ After the merger or consolidation, the credit institution can ensure that the real value of its charter capital is at least equal to the legal capital and satisfies the prudential ratios prescribed in Article 130 of this Law.

2. The order and procedures for deciding on merger, consolidation or assignment of all shares or capital contributions of a credit institution under special control in the cases specified in Clause 4, Article 148, Clauses 2 and 4, Article 148c of this Law must comply with Clauses 2 and 3, Article 147a of this Law.

Article 149a. Formulation and approval of a plan on merger, consolidation or assignment of all shares or capital contributions

1. The procedures for formulation and approval of a plan on merger, consolidation or assignment of all shares or capital contributions must comply with Clauses 1, 2 and 3, Article 148 of this Law.

2. In case a credit institution under special control fails to complete the formulation of a plan or its plan is not approved within the time limit prescribed in Clauses 1 and 3, Article 148 of this Law, the State Bank shall consider and propose to the Government for decision the dissolution, compulsory transfer or bankruptcy of such credit institution.

Article 149b. Contents of a plan on merger, consolidation or assignment of all shares or capital contributions

1. A plan on merger, consolidation or assignment of all shares or capital contributions must have at least the following contents:

a/ Title of the plan and process of plan implementation;

b/ Information about the to-be-merged and merging credit institutions, to-be-consolidated institution and/or investor(s) to receive all assigned shares or capital contributions, including information proving their capacity and conditions as prescribed by law;

c/ A plan on organizational structure, governance and administration, including the integration and conversion of the information technology system in case of merger or consolidation;

d/ A plan on business operation for 3 years after the merger, consolidation or assignment of all shares or capital contributions, including projected prudential ratios as prescribed in Article 130 of this Law;

dd/ A plan on settlement of borrowed special loans, including those specified in Clause 3, Article 145a of this Law;

e/ Support measures specified in Article 149c of this Law which need to be applied;

g/ Plan implementation schedule and time limit.

2. In case of assignment of all shares or capital contributions, a plan thereon must have a plan to remedy the situation leading to the special control of the credit institution.

Article 149c. Measures to support the implementation of a plan on merger, consolidation or assignment of all shares or capital contributions

After the merger, consolidation or assignment of all shares or capital contributions, a credit institution may apply one or several of the following support measures:

1. The measures specified at Points a and c, Clause 1, Article 148b of this Law;

2. In case the money amount to be set aside as a risk provision is larger than the difference between annual business expenses and revenues (excluding the risk provision temporarily set aside in the year), the risk provision to be set aside must comply with the approved plan but must be at least equal to such difference;

3. Other measures under the approved plan.

Article 149d. Implementation of a plan on merger, consolidation or assignment of all shares or capital contributions

1. The State Bank shall direct, inspect and supervise the implementation of an approved plan.

2. The State Bank shall decide or propose the Prime Minister to decide according to his/her competence on modifications and/or additions to the plan, including extension of the time limit for plan implementation at the request of the special control board.

3. The order and procedures for merger, consolidation or assignment of all shares or capital contributions must comply with law.

4. In case a credit institution under special control fails to implement its plan on merger, consolidation or assignment of all shares or capital contributions upon the expiration of the time limit for implementation, the State Bank shall consider and propose the Government to decide on dissolution, compulsory transfer or bankruptcy of such credit institution.

Section 1d

PLANS ON DISSOLUTION OF CREDIT INSTITUTIONS UNDER SPECIAL CONTROL

Article 150. Dissolution of a credit institution under special control

1. At the request of the State Bank, the Government shall decide on dissolution of a credit institution under special control under Article 147a or in one of the cases specified in Clause 4, Article 148; Clause 4, Article 148c; Clause 2, Article 149a, or Clause 4, Article 149d of this Law, provided such credit institution satisfies the conditions prescribed by the law on dissolution of enterprises and cooperatives.

2. The order and procedures for deciding on dissolution of a credit institution under special control in the cases specified in Clause 4, Article 148; Clause 4, Article 148c; Clause 2, Article 149a, or Clause 4, Article 149d, of this Law must comply with Clauses 2 and 3, Article 147a of this Law.

Article 150a. Organization of dissolution    

1. After the Government decides on dissolution of a credit institution under special control, the State Bank shall direct, inspect and supervise the organization of the dissolution of such credit institution and supervise the liquidation of assets under Clause 2, Article 156 of this Law.

2. A credit institution under special control shall be dissolved in accordance with law.

Section 1dd

PLANS ON COMPULSORY TRANSFER OF COMMERCIAL BANKS UNDER SPECIAL CONTROL

Article 151. Compulsory transfer of a commercial bank under special control

1. The State Bank shall propose to the Government for decision the compulsory transfer of a credit institution being a commercial bank under special control to a transfer-receiving party specified in Article 147a or in one of the cases specified in Clause 4, Article 148; Clause 4, Article 148c; Clause 2, Article 149a, or Clause 4, Article 149d of this Law when the following conditions are fully satisfied:

a/ The real value of charter capital and reserve funds is negative;

b/ The transfer-receiving party so requests.

2. The order and procedures for deciding on compulsory transfer of a commercial bank under special control in the cases specified in Clause 4, Article 148; Clause 4, Article 148c; Clause 2, Article 149a, or Clause 4, Article 149d of this Law must comply with Clauses 2 and 3, Article 147a of this Law.

Article 151a. Formulation and approval of a plan on compulsory transfer of a commercial bank under special control

1. The State Bank shall request a commercial bank under special control to hire an independent audit firm to review and assess the financial status and determine the real value of the charter capital and reserve funds of the commercial bank, unless there is a report of an independent audit firm as specified in Article 147 of this Law which is disclosed within 6 months before the Government decides on the compulsory transfer.

2. Based on results of the determination by an independent audit firm of the real value of charter capital and reserve funds and at the request of the special control board, the State Bank shall decide on the real value of charter capital and reserve funds, record the decrease in the charter capital of the commercial bank under special control and a capital amount which needs to be added to increase the real value of the charter capital to at least equal to the legal capital.

3. The State Bank shall request in writing the commercial bank under special control to increase its charter capital within a specified time limit.

When the commercial bank completes increasing its charter capital, the State Bank shall request it to continue implementing the approved plan or to formulate and implement a recovery plan under Section 1b, Chapter VIII of this Law or the State Bank shall consider terminating the special control under Article 145b of this Law.

If the commercial bank fails to increase its charter capital, the special control board shall request the expected transfer-receiving party to formulate and finalize a plan on compulsory transfer, then submit it to the special control board for consideration within 60 days after being requested.

4. Within 30 days after receiving a plan on compulsory transfer of the expected transfer-receiving party, the special control board shall assess the feasibility of the plan and report it to the State Bank.

5. Within 60 days after receiving a report and a plan on compulsory transfer of a commercial bank under special control submitted by the special control board, the State Bank shall consider the plan and submit it to the Government for approval.

6. Within 30 days after receiving a plan on compulsory transfer from the State Bank, the Government shall consider and approve such plan and assign the State Bank to issue a decision on compulsory transfer.

7. In case no plan on compulsory transfer of a commercial bank under special control can be formulated or such a plan is not approved, the State Bank shall propose the Government to decide on bankruptcy of such commercial bank.

Article 151b. Contents of a plan on compulsory transfer

A plan on compulsory transfer must have at least the following contents:

1. Information about the transfer-receiving party;

2. A plan on increase of charter capital and time limit for completion;

3. A plan on business operation suitable to the actual status of the commercial bank under special control in each period;

4. A plan on organizational structure, governance and administration;

5. A plan on resolution of problems, weaknesses, non-performing loans and security assets;

6. A plan on settlement of deposits of clients being legal persons, deposits and loans of other credit institutions; a plan on settlement of borrowed special loans, including those specified in Clause 3, Article 145a of this Law;

7. A plan on settlement of share or capital contribution of the transfer-receiving party at the commercial bank after the compulsory transfer which exceeds the prescribed limit applicable to credit institutions not under special control or handling of the commercial bank under special control as a legal person after the compulsory transfer through increasing charter capital or assigning shares or capital contributions to new investors, or merger or consolidation with another credit institution.

8. Support measures specified in Article 151c of this Law which need to be taken.

9. Implementation schedule and time limit of the plan.

Article 151c. Measures to support the implementation of a plan on compulsory transfer

A commercial bank subject to compulsory transfer may apply one or several of the measures specified in Clause 1, Article 148b of this Law under the approved plan on compulsory transfer.

Article 151d. Implementation of a plan on compulsory transfer

1. The State Bank shall issue a decision on compulsory transfer after the plan on compulsory transfer is approved. From the time the State Bank decides on compulsory transfer of a commercial bank, all rights and benefits of the owner, capital contributors and shareholders of such bank no longer exist.

2. A decision on compulsory transfer of a commercial bank must have at least the following contents:

a/ Name of the transfer-receiving party; name of the compulsorily transferred commercial bank before and after the compulsory transfer; legal form and charter capital of the commercial bank after the compulsory transfer;

b/ Cessation of all rights and benefits of the owner, capital contributors and shareholders of the compulsorily transferred commercial bank;

c/ Responsibilities of the transfer-receiving party and compulsorily transferred commercial bank after the compulsory transfer.

3. The transfer-receiving party shall:

a/ Exercise the rights of the owner, capital contributors and shareholders of the compulsorily transferred commercial bank;

b/ Implement the approved plan on compulsory transfer.

4. After being compulsorily transferred, a commercial bank under special control shall:

a/ Carry out the procedures for its legal transformation (if any) and procedures for change of its owner, capital contributors and shareholders;

b/ Implement the approved plan on compulsory transfer.

5. In case of necessity, the State Bank may propose to the Government for decision modifications and/or additions to a plan on compulsory transfer, including extension of the time limit for implementation of the plan.

6. The State Bank shall direct, inspect and supervise the implementation of approved plans on compulsory transfer.

7. In case a commercial bank under special control fails to remedy the situation leading to its special control upon the expiration of the time limit for implementation of the plan on compulsory transfer, the State Bank shall consider and propose the bankruptcy of such commercial bank to the Government for decision.

Article 151dd. Conditions on a transfer-receiving party

1. A transfer-receiving party being a credit institution must satisfy the following conditions:

a/ Having been operated at a profit for at least 2 years prior to the time of being requested to receive the transfer according to its independently audited financial statements;

b/ Satisfying the prudential ratios prescribed in Article 130 of this Law;

c/ Having a feasible plan on compulsory transfer with information proving that the transfer-receiving party has sufficient capital for capital contribution under the plan.

2. A transfer-receiving party being not a credit institution must satisfy the following conditions:

a/ Being a legal entity;

b/ Satisfying the conditions prescribed at Points a and c, Clause 1 of this Article.

Article 151e. Rights of a transfer-receiving party

1. A transfer-receiving party being a credit institution has the following rights:

a/ To hold 100% of charter capital of the compulsorily transferred commercial bank in case such commercial bank is transformed into a single-member limited liability company;

b/ To refuse to consolidate financial statements of the compulsorily transferred commercial bank;

c/ To exclude the compulsorily transferred commercial bank when calculating the syndicated capital adequacy ratio;

d/ To refuse to set aside a provision for the decrease of investments for capital contributions to the compulsorily transferred commercial bank and exclude such capital contributions when calculating its capital contribution or share purchase limits.

The level of the transfer-receiving credit institution’s contribution of capital to, or purchase of shares of, the compulsorily transferred commercial bank is that specified in the approved plan on compulsory transfer;

dd/ To sell or distribute its shares to foreign investors in conformity with the approved plan on compulsory transfer;

e/ To apply one or several of the support measures specified in Article 148b of this Law under the approved plan on compulsory transfer.

2. A transfer-receiving party being not a credit institution may hold shares or capital contributions of a compulsorily transferred commercial bank in excess of the share or capital contribution holding limit prescribed in Articles 55 and 70 of this Law.

Article 151g. Handling of shares or capital contributions in excess of the prescribed limit and handling of a commercial bank under special control as a legal entity after compulsory transfer

1. The handling of shares or capital contributions of a transfer-receiving party in a commercial bank under special control after compulsory transfer in excess of the prescribed limit applicable to credit institutions not under special control or handling of a commercial bank under special control after compulsory transfer as a legal entity must comply with the approved plan on compulsory transfer.

2. The handling of shares or capital contributions or handling of commercial bank under special control as a legal entity mentioned in Clause 1 of this Article shall be carried out within the time limit stated in the approved plan on compulsory transfer when both of the following conditions are satisfied:

a/ The increase of charter capital under the approved plan on compulsory transfer has been completed;

b/ One year has elapsed since the decision on compulsory transfer took effect.

Section 1e

PLANS ON BANKRUPTCY OF CREDIT INSTITUTIONS UNDER SPECIAL CONTROL

Article 152. Bankruptcy of credit institutions under special control

1. The State Bank shall consider and propose to the Government for decision the bankruptcy of a credit institution under special control under Article 147a or in one of the cases specified in Clause 4, Article 148; Clause 4, Article 148c; Clause 2, Article 149a; Clause 4, Article 149d; Clause 7, Article 151a, or Clause 7, Article 151d of this Law when the credit institution under special control falls bankrupt.

2. The order and procedures for deciding on bankruptcy in the case specified in Clause 4, Article 148; Clause 4, Article 148c; Clause 2, Article 149a; Clause 4, Article 149d; Clause 7, Article 151a, or Clause 7, Article 151d, of this Law must comply with Clauses 2 and 3, Article 147a of this Law.

Article 152a. Formulation and implementation of a plan on bankruptcy

1. Within 30 days after the Government decides on bankruptcy of a credit institution under special control, the special control board shall assume the prime responsibility for, and coordinate such credit institution and the Vietnam Deposit Insurance in, formulating a plan on bankruptcy of the credit institution and submitting it to the State Bank for consideration.

In case of formulating a plan on bankruptcy of a people’s credit fund, the special control board shall assume the prime responsibility for, and coordinate with such people’s credit fund, the Vietnam Deposit Fund and Vietnam Cooperative Bank in, implementing such plan.

2. Within 30 days after receiving a plan on bankruptcy of a credit institution under special control, the State Bank shall consider and assess the feasibility of the plan and submit it to the Government for approval.

Article 152b. Contents of a plan on bankruptcy

A plan on bankruptcy of a credit institution under special control must have at least the following contents:

1. Assessment of the actual situation and process of handling of the credit institution subject to bankruptcy;

2. Assessment of impacts of the implementation of the plan on safety of the credit institution system;

3. Plan on repayment of deposits of individual clients;

4. Implementation schedule of the plan and implementation responsibilities.

Article 152c. Organization of implementation of a plan on bankruptcy

1. The State Bank shall direct, inspect and supervise the implementation of the approved plan on bankruptcy of a credit institution under special control, including requesting such credit institution to file a request with the court to open the bankruptcy procedures in accordance with the bankruptcy law.

2. In case of necessity, the State Bank may propose modifications and/or additions to a plan on bankruptcy to the Government for decision.

3. The bankruptcy of a credit institution under special control shall be carried out in accordance with the regulations on bankruptcy of credit institutions.”

29. To add Clause 3 to Article 155 as follows:

“3. After the judge appoints a receiver or an asset management and liquidation business, the State Bank shall revoke the license of the credit institution.”

30. To add the phrase “foreign bank branches” following the phrase “credit institutions” in the title and Clauses 2 and 4, Article 156.

31. To amend and supplement Clause 3, Article 156 as follows:

“3. In the process of supervising the liquidation of assets of a dissolved credit institution, if detecting that the credit institution cannot pay all debts, the State Bank shall issue a decision to terminate the liquidation and proceed to implementing a plan on bankruptcy of the credit institution under Section 1e, Chapter VIII of this Law.”

Article 2. Implementation provisions

This Law takes effect on January 15, 2018.

Article 3. Transitional provisions

1. The restructuring of a credit institution under special control or currently implementing a handling plan approved by a competent authority or of a commercial bank compulsorily purchased before the effective date of this Law may continue under the decided plan.

The modification of one content or several contents of a decided plan, change of a plan or formulation of a new plan on restructuring must comply with the relevant provisions of Sections 1, 1b, 1c, 1d, 1dd and 1e, Chapter VIII of Law No. 47/2010/QH12 on Credit Institutions as amended and supplemented by this Law.

2. During the period of special control, a commercial bank compulsorily purchased before the effective date of this Law may apply one or several of the support measures specified in Clause 1, Article 148b of Law No. 47/2010/QH12 on Credit Institutions as amended and supplemented by this Law under a decision of the Prime Minister at the request of the State Bank.

3. For a commercial bank compulsorily purchased before the effective date of this Law, the transfer of all capital contributions or the whole charter capital to another credit institution or investor from the effective date of this Law shall be carried out as follows:

a/ The State Bank shall formulate a plan and submit it to the Prime Minister for approval before implementing it;

b/ Such a plan must have at least the following contents: information about the transfer-receiving party; plan on handling of shares or capital contributions in excess of the prescribed limit in the compulsorily purchased commercial bank after its transfer in case the transfer-receiving party is a credit institution established and operating in Vietnam; implementation schedule and time limit of the transfer plan; the contents specified in Clauses 2, 3, 4, 5 and 6, Article 151b of Law No. 47/2010/QH12 on Credit Institutions as amended and supplemented by this Law; and the contents specified at Points d, dd and g of this Clause;

c/ The transfer-receiving party must satisfy the conditions on transfer-receiving parties prescribed in Article 151dd of Law No. 47/2010/QH12 on Credit Institutions as amended and supplemented by this Law;

d/ Capital contributions shall be transferred under a direct agreement with the purchaser; the transfer price of capital contributions must not be lower than the real value of the charter capital and reserve funds determined by an independent audit firm under the market price mechanism;

dd/ After being transferred, the compulsorily purchased commercial bank may apply one or several of the support measures specified in Clause 1, Article 148b of Law No. 47/2010/QH12 on Credit Institutions as amended and supplemented by this Law, and sell non-performing loans with security assets to the institution with wholly state-owned charter capital established by the Government to resolve non-performing loans of credit institutions;

e/ The transfer-receiving party may exercise the rights of transfer-receiving parties prescribed in Article 151e of Law No. 47/2010/QH12 on Credit Institutions as amended and supplemented by this Law;

g/ The handling of shares or capital contributions in excess of the prescribed limit in the compulsorily purchased commercial bank after its transfer in case the transfer-receiving party is a credit institution established and operating in Vietnam must comply with Article 151g of Law No. 47/2010/QH12 on Credit Institutions as amended and supplemented by this Law.

4. Managers, executive officers and holders of other titles of credit institutions and foreign bank branches who are elected or appointed before the effective date of this Law but fail to satisfy the conditions prescribed in Law No. 47/2010/QH12 on Credit Institutions as amended and supplemented by this Law may continue holding their positions until the expiration of their terms of office or appointment.

5. For credit extension contracts signed before the effective date of this Law, credit institutions, foreign bank branches and clients may continue implementing their signed agreements until their expiration. From the effective date of this Law, any modifications and/or additions to the above-said credit contracts may be effected only if they comply with Law No. 47/2010/QH12 on Credit Institutions as amended and supplemented by this Law.

6. The State Bank shall issue detailed guidance on the time limit, order and procedures for transition in case shareholding rates of major shareholders of credit institutions and their affiliated persons are incompliant with Clause 3, Article 55 of Law No. 47/2010/QH12 on Credit Institutions as amended and supplemented by this Law. 

This Law was passed on November 20, 2017, by the XIV^th National Assembly of the Socialist Republic of Vietnam at its 4^th session.-

Chairwoman of the National Assembly
NGUYEN THI KIM NGAN