Law on Credit Institution No. 32/2024/QH15

LAW ON CREDIT INSTITUTIONS^[1]

Pursuant to the Constitution of the Socialist Republic of Vietnam;

The National Assembly promulgates the Law on Credit Institutions.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Law provides the establishment, organization, operation, early intervention, special control, reorganization, dissolution and bankruptcy of credit institutions; the establishment, organization, operation, early intervention, dissolution and termination of operation of foreign bank branches; the establishment and operation of Vietnam-based representative offices of foreign credit institutions and other foreign institutions engaged in banking activities; the handling of non-performing loans and collateral of non-performing loans of credit institutions, foreign bank branches and institutions with 100% charter capital owned by the State and having the function of debt trading and handling.

Article 2. Subjects of application

1. Credit institutions.

2. Foreign bank branches.

3. Vietnam-based representative offices of foreign credit institutions and other foreign institutions engaged in banking activities (below referred to as foreign representative offices).

4. Institutions with 100% charter capital owned by the State and having the function of debt trading and handling (below referred to as debt trading and handling institutions).

5. Agencies, organizations and individuals involved in the establishment, organization, operation, early intervention, special control, reorganization, dissolution or bankruptcy of credit institutions; the establishment, organization, operation, early intervention, dissolution and termination of operation of foreign bank branches; the establishment and operation of foreign representative offices; and the handling of non-performing loans and collateral of non-performing loans of credit institutions, foreign bank branches and debt trading and handling institutions.

Article 3. Application of commercial practices

Organizations and individuals engaged in banking activities may agree on the application of the following commercial practices:

1. International commercial practices issued by the International Chamber of Commerce;

2. Other commercial practices that are not contrary to the fundamental principles of Vietnam’s law.

Article 4. Interpretation of terms

In this Law, the terms below are construed as follows:

1. Factoring means a form of credit extension through the redemption of receivables of the seller or the advance payment on behalf of the purchaser under a contract on goods purchase and sale or service provision between the purchaser and the seller.

2. Bank guarantee means a form of credit extension to customers in which a credit institution or foreign bank branch makes a commitment to the beneficiary that it will perform financial obligations on behalf of the obligor when the obligor fails to perform or incompletely performs the committed obligations; and the customer is subject to compulsory indebtedness and repays the debt to the credit institution or foreign bank branch as agreed upon.

3. Early intervention means application by the State Bank of Vietnam (below referred to as the State Bank) of restrictive requirements and measures to credit institutions and foreign bank branches, requesting such credit institutions and foreign bank branches to implement remedial plans under the State Bank’s supervision in order to remediate the situation under Clause 1, Article 156 of this Law.

4. Credit extension means an agreement for an organization or individual to use a money amount or a commitment to allow the use of a money amount on the principle of refund through operations of lending, discount, financial leasing, factoring, bank guarantee and letter of credit, and other credit extension operations.

5. Foreign bank branch means an economic organization without legal person status that is a dependent unit of a foreign bank and has all of its obligations and commitments in Vietnam secured by the foreign bank.

6. Discount means a form of credit extension through term purchase or purchase with reservation of the right of recourse of negotiable instruments and other valuable papers of the beneficiary before the due date of such instruments and papers.

7. Lending means a form of credit extension in which the lender allocates or commits to allocate to the customer a money amount to be used for a specified purpose, within a certain period of time, and on the principle of full payment of the principal and interest to the lender as agreed upon.

8. Major shareholder means a shareholder of a credit institution being a joint-stock company that owns 5% or more of voting shares of such credit institution, including also shares it/he/she indirectly holds.

9. Subsidiary of a credit institution means a company falling into one of the following cases:

a/ A credit institution or a credit institution and its related persons that own(s) more than 50% of the charter capital or more than 50% of the voting shares of such company;

b/ A credit institution that has the right to appoint a majority or all of members of the Board of Directors, members of the Members’ Council and the Chief Executive Officer of such company;

c/ A credit institution that has the right to modify and supplement the charter of such company;

d/ A credit institution or a credit institution and its related persons that directly or indirectly control(s) the approval of resolutions and decisions of the General Meeting of Shareholders, Board of Directors or Members’ Council of such company.

10. Controlling company means a company that directly or indirectly owns more than 20% of the charter capital of a commercial bank, or a company that holds control over a commercial bank, or a commercial bank with subsidiaries or affiliated companies.

11. Affiliated company of a credit institution means a company in which the credit institution or the credit institution and its related persons own(s) more than 11% of the charter capital or more than 11% of voting shares, but which is not a subsidiary of such credit institution.

12. Specialized finance company means a type of non-bank credit institution whose main activities are in one of the fields of factoring, consumer credit and financial leasing in accordance with this Law.

13. General finance company means a type of non-bank credit institution that performs activities in accordance with Section 3, Chapter V of this Law.

14. Via-account provision of payment services means the supply of means of payment; and performance of payment services for checks, payment orders, authorized collection forms, and bank cards, and other payment services for customers via their payment accounts.

15. Licenses include licenses for establishment and operation of credit institutions, licenses for establishment of foreign bank branches, and licenses for establishment of foreign representative offices issued by the State Bank. The State Bank’s document on modification and supplementation of a license constitutes an integral part of such license.

16. Capital contribution or share purchase by a credit institution means that a credit institution contributes capital or authorizes another institution to contribute capital to the charter capital; purchases shares of enterprises or other credit institutions, including also the acquisition or purchase of shares or capital contributions of enterprises or other credit institutions; allocates capital for or contributes capital to its subsidiaries and affiliated companies; or contributes capital to investment funds.

17. Banking activities means the regular trading or supply of one or several of the following operations:

a/ Receiving deposits;

b/ Extending credit;

c/ Providing via-account payment services.

18. Investment in the form of capital contribution or share purchase to take control of an enterprise means an investment amount accounting for more than 50% of charter capital or voting share capital of an enterprise or another investment amount that is sufficient to influence decisions of the General Meeting of Shareholders or Members’ Council.

19. Special control means the State Bank’s decision to place a credit institution under the State Bank’s direct control.

20. Monetary brokerage means the acting as an intermediary with a brokerage charge to arrange the performance of banking activities and other business activities in accordance with this Law among credit institutions and foreign bank branches.

21. Bank means a credit institution that may carry out all banking activities in accordance with this Law. Banks include commercial banks, policy banks and cooperative banks.

22. Cooperative bank means a bank of all people’s credit funds that is established with capital contributions of people’s credit funds and a number of other legal entities with the main goals of connecting the system of people’s credit funds, providing financial support and regulating capital in such system.

23. Commercial bank means a type of bank that may to carry out all banking activities and other business activities in accordance with this Law for profit-making purposes.

24. Related persons means organizations and individuals that have direct or indirect relationships with other organizations and individuals in one of the following cases:

a/ Relationship between the parent company and its subsidiaries and vice versa; between the parent company and its subsidiaries’ subsidiaries and vice versa; between a credit institution and its subsidiaries and vice versa; between a credit institution and its subsidiaries’ subsidiaries and vice versa; between subsidiaries of the same parent company or the same credit institution; between subsidiaries of subsidiaries of the same parent company or the same credit institution; or between managers, supervisors and members of the Supervisory Board of the parent company or of a credit institution, and individuals or organizations competent to appoint such persons and subsidiaries and vice versa;

b/ Relationship between a company or credit institution and managers, supervisors and members of the Supervisory Board of such company or credit institution, or between a company or credit institution and the company or institution competent to appoint such persons and vice versa;

c/ Relationship between a company or credit institution and an organization or individual holding 5% or more of charter capital or voting share capital in such company or credit institution and vice versa;

d/ Relationship between an individual and his/her spouse; natural father/mother, adoptive father/mother, stepfather/stepmother, father-in-law/mother-in-law; offspring, adopted child, stepchild, child-in-law; sibling; half-sibling; and brother-in-law/sister-in-law of sibling or half-sibling (below collectively referred to as spouse, parent, child and brother/sister); paternal grandfather/grandmother, maternal grandfather/grandmother; paternal grandchild, maternal grandchild; and blood uncle, aunt and nephew/niece;

dd/ Relationship between a company or credit institution and an individual who has a relationship specified at Point d of this Clause with a manager, supervisor or member of the Supervisory Board, capital contributor or shareholder holding 5% or more of the charter capital or voting share capital of such company or credit institution and vice versa;

e/ Relationship between an individual authorized to represent the capital contribution of the institution or individual specified at Point a, b, c, d or dd of this Clause and the authorizer; or between individuals authorized to represent capital contributions of the same institution;

g/ Relationship between other legal entities and individuals that have relationships with latent risks to the operation of credit institutions or foreign bank branches as determined under internal regulations of credit institutions or foreign bank branches or as requested in writing by the State Bank through inspection and supervision activities;

h/ Relationship between related persons and customers of people’s credit funds, including the cases specified at Points b, c, dd and g of this Clause; or between customers and their spouses, parents, children and siblings.

25. Executive officers of a credit institution include the Chief Executive Officer, Chief Operations Officers, Chief Accountant, Branch Directors and holders of equivalent titles as specified in the charter of such credit institution.

26. Managers of a credit institution include the Chairperson and other members of the Board of Directors; the Chairperson and other members of the Members’ Council; Chief Executive Officer and holders of other managerial titles as specified in the charter of such credit institution.

27. Deposit receiving means the receipt of money from depositing institutions and individuals (below collectively referred to as depositors) in the form of demand deposits, time deposits, savings deposits, and issuance of deposit certificates and other forms of deposit receiving on the principle of full refund of principal and interest as agreed upon to the depositors.

28. Mandatory transfer plan means a plan under which owners, capital contributors and shareholders of a commercial bank placed under special control are required to transfer all of their shares and capital contributions to the transferee.

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

a/ Recovery plan;

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

c/ Mandatory transfer plan;

d/ Dissolution plan;

dd/ Bankruptcy plan.

30. People’s credit fund means a credit institution voluntarily established by legal entities, individuals or households in the form of cooperative to carry out one or several of banking activities in accordance with this Law with the main goal of providing mutual assistance in production and business development and life.

31. Mass withdrawal means that a credit institution suffers simultaneous withdrawals by many depositors, making it face a risk of insolvency or face insolvency under regulations of the State Bank Governor.

32. Derivative product means a financial instrument that is valued on the basis of expected fluctuations in the value of an underlying financial asset such as interest rate, foreign exchange or currency or another financial asset.

33. Indirect ownership means an institution’s or individual’s ownership of charter capital of a credit institution through entrusted investment or through an enterprise in which such institution or individual owns more than 50% of charter capital.

34. Rediscount means the discount of negotiable instruments and other valuable papers that have been discounted before their due date.

35. Payment account means a demand deposit account opened by a customer at a bank or foreign bank branch to use payment services provided by such bank or foreign bank branch.

36. Letter of credit means a form of credit extension through the issuance, confirmation, negotiation of payment and return of letters of credit.

37. Microfinance institution means a credit institution that mainly performs one or several of banking activities in order to meet the needs of low-income individuals and households and microenterprises.

38. Credit institution means an economic institution with the legal person status that performs one, several or all of banking activities in accordance with this Law. Credit institutions include banks, non-bank credit institutions, microfinance institutions and people’s credit funds.

39. Supporting credit institution means a credit institution that participates in governing, administering, controlling, and providing organizational, operational and financial support for, a credit institution placed under special control.

40. Foreign credit institution means a credit institution established in a foreign country in accordance with law of such country.

Foreign credit institutions may have their commercial presence in Vietnam in the form of joint-venture banks, wholly foreign-owned banks, foreign bank branches, joint-venture finance companies, wholly foreign-owned finance companies, joint-venture financial leasing companies, wholly foreign-owned financial leasing companies, and foreign representative offices.

Joint-venture banks and wholly foreign-owned banks are commercial banks; joint-venture finance companies, wholly foreign-owned finance companies, joint-venture financial leasing companies, and wholly foreign-owned financial leasing companies are general finance companies or specialized finance companies in accordance with this Law.

41. Non-bank credit institution means a credit institution that may carry out one or several of banking activities in accordance with this Law, except the receipt of deposits from individuals and the provision of payment services via customers’ accounts. Non-bank credit institutions include general finance companies and specialized finance companies.

42. Charter capital means the total money amount contributed by owners or capital contributors of a credit institution being a limited liability company; or the total par value of shares of a credit institution being a joint-stock company sold to its shareholders; or the total money amount contributed by members of a
credit institution being a cooperative or a capital amount provided by the State as support to a cooperative bank.

43. Allocated capital of a foreign bank branch means a money amount allocated by a foreign bank to its branch.

44. Legal capital means the minimum capital level required by law for the establishment of a credit institution or foreign bank branch.

45. Equity includes the real value of charter capital of a credit institution or allocated capital of a foreign bank branch, plus a number of reserve funds, plus a number of other liabilities, and minus deductibles. The determination of equity must comply with regulations of the State Bank Governor.

Article 5. Use of phrases related to banking activities

Institutions other than credit institutions or foreign bank branches are not allowed to use the phrases “credit institutions”, “banks”, “finance companies”, “financial leasing companies”, “microfinance institutions”, and “people’s credit funds” or other phrases and words in their names, titles or extensions of their names or titles, or in transaction papers or advertisements if the use of such phrases or words is likely to make customers misunderstand that such institutions are credit institutions or foreign bank branches.

Article 6. Legal form of credit institutions

1. Domestic commercial banks shall be established and organized in the form of joint-stock companies, except the case specified in Clause 2 of this Article and the case of implementation of approved mandatory transfer plans.

2. State-owned commercial banks shall be established and organized in the form of single-member limited liability companies with 100% charter capital held by the State.

3. Domestic non-bank credit institutions shall be established and organized in the form of joint-stock companies or limited liability companies.

4. Joint-venture credit institutions and wholly foreign-owned credit institutions shall be established and organized in the form of limited liability companies.

5. Cooperative banks and people’s credit funds shall be established and organized in the form of cooperatives.

6. Microfinance institutions shall be established and organized in the form of limited liability companies.

Article 7. The right to autonomy in business activities

1. Credit institutions and foreign bank branches have the right to autonomy in their business activities and shall take responsibility for their business results.

2. Credit institutions and foreign bank branches may refuse requests for credit extension or provision of other services if deeming such requests ineligible, ineffective or incompliant with law.

Article 8. The right to carry out banking activities

Institutions that fully satisfy the conditions specified in this Law and other relevant laws and are granted licenses by the State Bank may carry out one or several of banking activities in accordance with this Law.

Article 9. Cooperation and competition in banking activities

Credit institutions and foreign bank branches may cooperate and compete with one another in banking activities and other business activities in accordance with this Law and other relevant laws.

Article 10. Responsibilities of credit institutions and foreign bank branches in protecting the interests of customers

1. To participate in deposit insurance and contribute to the fund for safety assurance of the system of people’s credit funds in accordance with law and publicly announce the participation in deposit insurance at their head offices and branches.

2. To create favorable conditions for customers to deposit and withdraw money, ensuring full and timely payment of the principal and interest of deposits as agreed upon in accordance with law.

3. To refuse the investigation, blockade, seizure or deduction of deposits of customers, unless such investigation, blockade, seizure or deduction is requested by competent state agencies in accordance with law or consented to by customers.

4. To publicly announce deposit interest rates, service charges, and rights and obligations of customers for each type of products or services being provided.

5. To publicly announce official trading hours. In case of suspension of transactions at one trading location or several trading locations during official trading hours or in case of suspension of electronic transactions, at least 24 hours before the expected time of suspension of transactions, a credit institution or foreign bank branch shall post information about such suspension at its trading location(s) or on its website.

In case of suspension of transactions due to force majeure events, within 24 hours after the time of suspension of transactions, a credit institution or foreign bank branch shall post information about such suspension at its trading location(s) or on its website.

Article 11. Legal representatives of credit institutions

1. The legal representative of a credit institution shall be defined in the charter of such credit institution and must be one of the following persons:

a/ The Chairperson of the Board of Directors or the Chairperson of the Members’ Council of the credit institution;

b/ The Chief Executive Officer of the credit institution.

2. The legal representative of a credit institution must reside in Vietnam; if not present in Vietnam, he/she shall authorize in writing another person who is a manager or an executive officer of the credit institution and residing in Vietnam to exercise the rights and perform the obligations of the legal representative of the credit institution.

3. A credit institution shall notify the State Bank of information about its legal representative within 10 days after such legal representative is elected or appointed under the charter of the credit institution or after such legal representative is changed. The State Bank shall notify information about the legal representative of the credit institution to the concerned business registration agency for updating to the national information system on enterprise and cooperative registration.

Article 12. Provision of information

1. Credit institutions and foreign bank branches shall provide account holders with information about transactions and balance on the latter’s accounts as agreed upon with the account holders.

2. Credit institutions and foreign bank branches shall report to the State Bank on information related to business activities and be provided by the State Bank with information of customers that have credit relations with credit institutions and foreign bank branches in accordance with regulations of the State Bank Governor.

3. Credit institutions and foreign bank branches may exchange information about their operation with one another.

4. When conducting transactions with credit institutions and foreign bank branches, customers shall provide truthful, accurate, adequate and timely information, documents and data and take responsibility for the provision of such information, documents and data.

Article 13. Information confidentiality

1. Managers, executive officers and employees of credit institutions and foreign bank branches may not disclose customer information and business secrets of such credit institutions or foreign bank branches.

2. Credit institutions and foreign bank branches shall ensure the confidentiality of their customer information in accordance with the Government’s regulations.

3. Credit institutions and foreign bank branches may not provide their customer information to other organizations and individuals, unless such provision is requested by competent state agencies as provided by law or consented to by customers.

Article 14. Data security and continuous operation assurance

Credit institutions and foreign bank branches shall ensure the safety of information systems, data confidentiality and uninterrupted operation in accordance with regulations of the State Bank Governor and other relevant regulations.

Article 15. Prohibited acts

1. Credit institutions and foreign bank branches carrying out banking activities and business activities other than those stated in their licenses granted by the State Bank.

2. Organizations and individuals other than credit institutions or foreign bank branches carrying out banking activities, except margin transactions and securities redemption transactions of securities companies.

3. Organizations and individuals illegally interfering in banking activities or other business activities of credit institutions and foreign bank branches.

4. Credit institutions and foreign bank branches committing practices in restraint of competition or practices of unfair competition that are likely to harm or that harm the implementation of the national monetary policy and the safety of the system of credit institutions, interests of the State, and lawful rights and interests of organizations and individuals.

5. Credit institutions, foreign bank branches, managers, executive officers and employees of credit institutions and foreign bank branches associating the sale of non-compulsory insurance products with the provision of banking products and services in any form.

Chapter II

POLICY BANK

Article 16. Establishment, operation and state management of the Policy Bank

1. The Policy Bank shall be established by the Prime Minister and operate not for profit purposes in order to implement the State’s socio-economic policies.

2. The Government shall specify operations of the Policy Bank.

3. The Prime Minister, ministries and ministerial-level agencies shall perform the state management of operation of the Policy Bank according to their competence.

Article 17. Owner and representative of the state owner of the Policy Bank

1. The State is the owner of the Policy Bank. The Government shall uniformly manage the performance of tasks and the exercise of powers of the state owner over the Policy Bank.

2. The Board of Directors shall act as the direct representative agency of the state owner at the Policy Bank, performing the tasks and exercising the powers of the state owner in accordance with the Government’s regulations.

Article 18. Charter capital of the Policy Bank

The charter capital of the Policy Bank shall be allocated from the state budget and supplemented from the state budget and other lawful financial sources.

Article 19. Organizational and management structure of the Policy Bank

1. The organizational and management structure of the Policy Bank shall be composed of the Board of Directors, Supervisory Board, Chief Executive Officer and other management apparatuses as specified by the Government.

2. The Policy Bank may set up its branches, operations center, transaction bureaus and other dependent units in accordance with law.

Article 20. Board of Directors of the Policy Bank

1. The Board of Directors shall be composed of the Chairperson and other members.

2. The term of office of a member of the Board of Directors must not exceed 5 years.

3. The Chairperson of the Board of Directors shall be appointed and relieved from duty by the Prime Minister.

4. The number and appointment and relief from duty of members of the Board of Directors; and the structure, tasks and powers of the Board of Directors shall be specified by the Government.

5. The Board of Directors has its assisting division. The functions and tasks of the assisting division shall be specified by the Board of Directors.

Article 21. Supervisory Board of the Policy Bank

1. The Supervisory Board shall be composed of the Head and other members.

2. The term of office of a member of the Supervisory Board must not exceed 5 years.

3. The number and appointment and relief from duty of members of the Supervisory Board; and the structure, tasks and powers of the Supervisory Board shall be specified by the Government.

4. The Supervisory Board has its internal audit division, which may use resources of the Policy Bank to perform its tasks.

Article 22. Chief Executive Officer of the Policy Bank

1. The Chief Executive Officer shall act as the legal representative of the Policy Bank and administer day-to-day activities of the Policy Bank.

2. The term of office of the Chief Executive Officer must not exceed 5 years.

3. The Chief Executive Officer shall be appointed and relieved from duty by the Prime Minister.

4. The appointment, relief from duty, rights and obligations of the Chief Executive Officer shall be specified by the Government.

Article 23. Assurance of operation of the Policy Bank

1. The Policy Bank may have its solvency guaranteed by the State and interest-rate differences and management fees offset; and enjoy exemption from taxes and other payables to the state budget in accordance with law.

2. The Policy Bank is neither subject to reserve requirements nor compelled to participate in deposit insurance.

Article 24. Internal control, internal audit and reporting of the Policy Bank

1. The Policy Bank shall carry out internal control and internal audit; and formulate and issue internal operation processes.

2. The Policy Bank shall implement the regime of statistical reporting and reporting on activities in accordance with law.

Article 25. Handling of non-performing loans and collateral of non-performing loans of the Policy Bank

The Policy Bank may apply the provisions of this Law to handle non-performing loans and collateral of non-performing loans of its own.

Article 26. Financial mechanism, salary, reorganization, dissolution, examination, inspection and supervision of the Policy Bank

The financial mechanism, salary, reorganization, dissolution, examination, inspection and supervision of the Policy Bank and other contents related to the Policy Bank must comply with this Chapter’s provisions and the Government’s regulations.

Chapter III

LICENSES

Article 27. Competence to grant, modify, supplement and revoke licenses

1. The State Bank has the competence to grant, modify, supplement and revoke licenses in accordance with this Law.

2. Licenses for establishment and operation of credit institutions also serve as enterprise registration certificates or cooperative registration certificates.

3. Licenses for establishment of foreign bank branches or licenses for establishment of foreign representative offices also serve as operation registration certificates of foreign bank branches or operation registration certificates of foreign representative offices.

4. The State Bank Governor shall provide the notification of information about the grant, modification, supplementation or revocation of licenses; information about the appointment of Chief Executive Officers of foreign bank branches and heads of foreign representative offices and relevant information to business registration agencies for updating to the national information system on enterprise and cooperative registration.

Article 28. Legal capital

1. The Government shall prescribe the legal capital level for each type of credit institution or foreign bank branch.

2. A credit institution or foreign bank branch shall maintain the real value of its charter capital or allocated capital at least equal to the legal capital level.

3. The real value of charter capital or allocated capital is equal to the charter capital or allocated capital and the surplus of share capital, plus undistributed earnings accumulated, minus unhandled losses accumulated as shown in accounting books.

4. The State Bank Governor shall provide the handling of cases in which the real value of charter capital of a credit institution or allocated capital of a foreign bank branch is lower than the legal capital level.

Article 29. Conditions for grant of licenses

1. A credit institution may be granted a license when fully satisfying the following conditions:

a/ Its charter capital is at least equal to the legal capital level;

b/ Its owner and founding shareholders or founding members that are legal entities are lawfully operating and financially capable to contribute capital; or its founding shareholders or founding members who are individuals have full civil act capacity and commit to being financially capable to contribute capital, for single-member limited liability companies;

c/ Managers, executive officers and members of the Supervisory Board fully satisfy the criteria and conditions specified in Article 41 of this Law;

d/ Its charter is compliant with this Law and other relevant laws;

dd/ Its establishment scheme and business plans are feasible, ensuring that they do not affect the safety and stability of the system of credit institutions, or do not lead to monopoly or restrict competition or cause unfair competition in the system of credit institutions.

2. A joint-venture credit institution or wholly foreign-owned credit institution may be granted a license when fully satisfying the following conditions:

a/ The conditions specified in Clause 1 of this Article;

b/ The concerned foreign credit institution is allowed to carry out banking activities in accordance with the law of the country where it is headquartered;

c/ Activities expected to be carried out in Vietnam must be those the concerned foreign credit institution is allowed to carry out in the country where it is headquartered;

d/ The concerned foreign credit institution satisfies the conditions on total assets and financial status under regulations of the State Bank Governor, and complies with the regulations on operation safety assurance of the country where it is headquartered;

dd/ The concerned foreign credit institution has made a written commitment to providing financial, technological, governance, management and operational assistance to the joint-venture credit institution or wholly foreign-owned credit institution, ensuring that the latter can maintain the real value of its charter capital not lower than the legal capital level and implement regulations on restrictions to ensure operation safety in accordance with this Law;

e/ The competent authority of the country where the concerned foreign credit institution is headquartered has signed an agreement with the State Bank on inspection and supervision of banking activities and exchange of information on banking safety supervision and has a written commitment on consolidated supervision in conformity with international practices with regard to the operation of the foreign credit institution.

3. A foreign bank branch may be granted a license when fully satisfying the following conditions:

a/ It has the allocated capital at least equal to the legal capital level;

b/ It satisfies the conditions specified at Points b, c and dd, Clause 1, and Points b, c, d and e, Clause 2, of this Article;

c/ The concerned foreign bank issues a document stating that it will take responsibility for all obligations and commitments of its Vietnam-based branch; ensures the maintenance of the real value of the allocated capital not lower than the legal capital level and the implementation of regulations on restrictions to ensure operation safety in accordance with this Law;

d/ In case of applying for a license for establishment of a second branch or more branches in Vietnam, the concerned foreign bank must ensure that the branch currently operating in Vietnam has committed no violations of relevant regulations and prudential ratios and has earned profits for 3 years preceding the year of application for a license for establishment of a new branch.

4. A foreign representative office may be granted a license when fully satisfying the following conditions:

a/ The concerned foreign credit institution or another foreign institution engaged in banking activities is a legal person allowed to carry out banking activities abroad;

b/ The law of the country where the foreign credit institution or another foreign institution engaged in banking activities is headquartered allows such institution to establish its representative offices in Vietnam.

5. The condition on owners of credit institutions being single-member limited liability companies, and founding shareholders or founding members specified at Point b, Clause 1 of this Article and conditions for grant of licenses for people’s credit funds and microfinance institutions shall be specified by the Government.

Article 30. Dossiers and procedures for grant of licenses

The State Bank Governor shall specify dossiers and procedures for first-time grant and renewal of licenses.

Article 31. Time limits for grant of licenses

1. Within 180 days after receiving a complete and valid dossier, the State Bank shall grant or refuse to grant a license for establishment and operation of a credit institution or a license for establishment of a foreign bank branch.

2. Within 60 days after receiving a complete and valid dossier, the State Bank shall grant or refuse to grant a license for establishment of a foreign representative office.

3. In case of refusal to grant a license, the State Bank shall issue a written notice, clearly stating the reason.

Article 32. Licensing fees

Credit institutions, foreign bank branches and foreign representative offices that are granted licenses for the first time or have their licenses renewed shall pay licensing fees in accordance with the law on charges and fees.

Article 33. Disclosure of information on operation commencement

A credit institution, foreign bank branch or foreign representative office shall publish the following information on 1 medium of the State Bank and on 1 printed newspaper for 3 consecutive issues or on 1 e-newspaper of Vietnam for at least 30 days before the expected date of operation commencement:

1. Name and head office address of the credit institution; or name and head office address of the foreign bank branch or foreign representative office;

2. Number and date of grant of its license;

3. Charter capital of the credit institution or allocated capital of the foreign bank branch;

4. Legal representative of the credit institution, Chief Executive Officer of the foreign bank branch, or head of the foreign representative office;

5. List and shareholding rates and capital contributions of founding shareholders or capital contributors or owners of the credit institution;

6. Expected date of operation commencement.

Article 34. Conditions for operation commencement

1. Credit institutions, foreign bank branches and foreign representative offices that are granted licenses may only operate from the date of operation commencement.

2. To commence operation, a credit institution or foreign bank branch that has been granted a license must fully satisfy the following conditions:

a/ It has sent the charter of the credit institution, approved by a competent authority, to the State Bank;

b/ It has sufficient charter capital or allocated capital; and vaults and head office satisfying the conditions specified by the State Bank Governor;

c/ Its organizational and management structure and internal control and internal audit systems are conformable with its type of operation in accordance with this Law and other relevant laws;

d/ Its information technology system meets operation management and scale requirements;

dd/ It has internal regulations on organization and operation of the Board of Directors, Members’ Council, Supervisory Board, Chief Executive Officer and professional departments and divisions at the head office; internal regulations on risk management; and regulations on operation network management;

e/ Its charter capital or allocated capital in Vietnam dong is fully deposited into the interest-free escrow account opened at the State Bank at least 30 days before the expected date of operation commencement. Charter capital or allocated capital shall be released as soon as the credit institution or foreign bank branch commences its operation;

g/ It has disclosed information on operation commencement under Article 33 of this Law.

3. Credit institutions, foreign bank branches and foreign representative offices shall commence their operation within 12 months after they are granted licenses, except force majeure events. Past this time limit, if they fail to commence their operation, their licenses will expire. The State Bank shall announce information on expiration of licenses on its portal.

4. A credit institution or foreign bank branch that is granted a license shall notify the State Bank of conditions for operation commencement specified in Clause 2 of this Article at least 15 days before the expected date of operation commencement. The State Bank shall suspend the commencement of operation when the credit institution or foreign bank branch fails to fully satisfy the conditions specified in Clause 2 of this Article.

Article 35. Use of licenses

1. Credit institutions, foreign bank branches and foreign representative offices that are granted licenses shall use the names and carry out the activities stated in their licenses.

2. Credit institutions, foreign bank branches and foreign representative offices that are granted licenses may not erase, modify, buy, sell, transfer, lease or lend their licenses.

Article 36. Revocation of licenses

1. The State Bank shall revoke a granted license in the following cases:

a/ The dossier of application for the license contains fraudulent information for the applicant to be eligible for licensing;

b/ The concerned credit institution is divided, merged, consolidated, dissolved, bankrupt, or transformed;

c/ The concerned credit institution, foreign bank branch or foreign representative office operates in contravention of its license;

d/ The concerned credit institution or foreign bank branch seriously violates the regulations on compulsory reserve requirements and prudential ratios;

dd/ The concerned credit institution or foreign bank branch fails to implement or incompletely implements the State Bank’s decision to ensure safety in banking activities;

e/ The concerned foreign credit institution or another foreign institution engaged in banking activities with a commercial presence in Vietnam is dissolved or bankrupt or has its license revoked or its operation suspended by the competent authority of the country where it is headquartered.

2. License revocation decisions shall be announced by the State Bank on its portal.

3. Credit institutions and foreign bank branches that have their licenses revoked shall terminate their business activities from the effective date of the State Bank’s license revocation decisions.

4. The State Bank Governor shall specify dossiers and procedures for license revocation.

Article 37. Changes subject to the State Bank’s approval

1. A credit institution or foreign bank branch must obtain the State Bank’s written approval before carrying out procedures for changing one of the following contents:

a/ Its name or head office location;

b/ Its charter capital or allocated capital, except the case specified in Clause 3 of this Article;

c/ Head office location of the credit institution’s branch;

d/ Its operation contents or duration;

dd/ Purchase and sale or transfer of capital contributions of its owners; purchase and sale or transfer of capital contributions of its capital contributors; or purchase or acquisition of its shares, making the purchasers or transferees become major shareholders. Owners, capital contributors, shareholders, purchasers and transferees of shares or capital contributions of credit institutions shall coordinate with credit institutions in carrying out procedures for obtaining approval for the contents specified at this Point.

In case of purchase and sale or acquisition and transfer of capital contributions of a credit institution being a limited liability company, the purchaser or transferee must satisfy the conditions applicable to owners and capital contributors specified at Point b, Clause 1, and Clause 2, Article 29, and Clause 2, Article 78, of this Law; capital contributors must comply with Clause 1, Article 77 of this Law;

e/ Suspension of transactions for 5 working days or more, except cases of suspension of transactions due to a force majeure event;

g/ Listing of stocks on foreign securities markets.

2. Dossiers and procedures for approval of the changes specified in Clause 1 of this Article and the modification and supplementation of licenses must comply with regulations of the State Bank Governor.

3. The change of the operation area of a people’s credit fund; the change of charter capital or the transfer of capital contributions of capital contributors of a cooperative bank or people’s credit fund must comply with regulations of the State Bank Governor.

4. Upon having one of the changes specified in Clause 1 of this Article approved, a credit institution or foreign bank branch shall carry out procedures for:

a/ Modifying and supplementing the charter of the credit institution in conformity with the approved change specified at Point a, b, d or dd, Clause 1 of this Article;

b/ Publishing the change specified at Point a, b, c or d, Clause 1 of this Article within 7 working days after obtaining the State Bank’s approval on 1 medium of the State Bank and 1 printed newspaper for 3 consecutive issues or on 1 newswire of Vietnam.

Chapter IV

ORGANIZATION, GOVERNANCE AND ADMINISTRATION OF CREDIT INSTITUTIONS AND FOREIGN BANK BRANCHES

Section 1

GENERAL PROVISIONS

Article 38. Branches, representative offices, non-business units and commercial presence of credit institutions

1. After obtaining the State Bank’s written approval, a credit institution may establish its branches, representative offices and non-business units in the country; or establish or transform its overseas commercial presences, including branches, representative offices and other forms of overseas commercial presence.

2. The State Bank Governor shall specify conditions, dossiers and procedures for establishment, transformation, dissolution and termination of operation of the units specified in Clause 1 of this Article for each type of credit institution.

3. A written approval for establishment of a domestic branch or representative office of a credit institution also serves as a branch or representative office operation registration certificate.

4. The State Bank Governor shall provide the notification of information about the establishment, dissolution and termination of operation of domestic branches and representative offices and relevant information to business registration agencies for updating to the national information system on enterprise and cooperative registration.

Article 39. Charter of credit institutions

1. The charter of a credit institution being a joint-stock company or limited liability company must have the following principal contents:

a/ Name and head office location;

b/ Operation contents;

c/ Operation duration;

d/ Charter capital, method of capital contribution, increase or decrease of charter capital;

dd/ Tasks and powers of the General Meeting of Shareholders, Board of Directors, Members’ Council and Supervisory Board and rights and obligations of the Chief Executive Officer;

e/ Procedures for electing, appointing and relieving from duty members of the Board of Directors, members of the Members’ Council, members of the Supervisory Board, and the Chief Executive Officer;

g/ Names, head office addresses and citizenships of owners and capital contributors, in case the credit institution is a limited liability company;

h/ Rights and obligations of owners and capital contributors, in case the credit institution is a limited liability company; or rights and obligations of shareholders, in case the credit institution is a joint-stock company;

i/ Legal representative;

k/ Financial, accounting, control and internal audit principles;

l/ Procedures for approval of decisions of the credit institution; principles of internal dispute resolution;

m/ Bases and methods for determining remuneration, salaries and bonuses for managers, executive officers and members of the Supervisory Board;

n/ Cases of, and procedures for, dissolution;

o/ Procedures for modification and supplementation of the charter.

2. The charter of a cooperative bank or people’s credit fund must have the following principal contents:

a/ The contents specified at Points a, b, c, d, e, i, k, l, m, n and o, Clause 1 of this Article;

b/ Tasks and powers of the General Meeting of Members, Board of Directors and Supervisory Board, and rights and obligations of the Chief Executive Officer;

c/ Cases of, and procedures for, termination of membership status;

d/ Rights and obligations of members;

dd/ Procedures for convening the General Meeting of Members and approving decisions of the General Meeting of Members; method of electing delegates to attend and vote at the General Meeting of Members in case the General Meeting of Members is organized in the form of a general meeting of delegates;

e/ Principles of profit division based on service use level and ratio of capital contributions of members;

g/ Financial management, and use and handling of assets, capital, funds and losses.

3. The charter and modification and supplementation of the charter of a credit institution shall be sent to the State Bank within 15 days after it is approved.

Article 40. Organizational and management structure of credit institutions

1. The organizational and management structure of a credit institution established in the form of a joint-stock company shall be composed of the General Meeting of Shareholders, Board of Directors, Supervisory Board, and Chief Executive Officer.

2. The organizational and management structure of a credit institution established in the form of a single-member limited liability company or limited liability company with two or more members shall be composed of the Members’ Council, Supervisory Board, and Chief Executive Officer.

3. The organizational and management structure of cooperative banks and people’s credit funds must comply with Article 82 of this Law.

Article 41. Criteria and conditions for managers, executive officers and holders of other titles of credit institutions

1. A member of the Board of Directors or member of the Members’ Council must fully satisfy the following criteria and conditions:

a/ Not falling into the cases in which he/she may not hold the posts specified in Clause 1, Article 42 of this Law;

b/ Having professional ethics as specified in regulations of the State Bank Governor;

c/ Possessing a university or higher degree;

d/ Satisfying one of the following conditions: having worked for at least 3 years as a manager or executive officer of a credit institution; having worked for at least 5 years as a manager of an enterprise operating in the field of finance, accounting or audit, or of another enterprise with the equity at least equal to the legal capital level for the corresponding type of credit institution; having at least 5 years’ experience in the professional division of a credit institution or foreign bank branch; or having at least 5 years’ experience in the professional division related to finance, banking, accounting or audit.

2. An independent member of the Board of Directors of a credit institution must fully satisfy the criteria and conditions specified in Clause 1 of this Article and the following criteria and conditions:

a/ He/she is not a person who is currently working for such credit institution or a subsidiary of such credit institution or who has worked for such credit institution or a subsidiary of such credit institution for the last 3 years;

b/ He/she does not regularly receive salary or remuneration of such credit institution, other than the remuneration for members of the Board of Directors;

c/ His/her wife/husband, father/mother, child or brother/sister or wife/husband of such person is not a major shareholder of such credit institution, manager or supervisor, or member of the Supervisory Board of such credit institution or of a subsidiary of such credit institution;

d/ He/she does not represent the ownership of shares of such credit institution; he/she does not directly or indirectly co-own with related persons 1% or more of charter capital or voting share capital of such credit institution;

dd/ He/she is not a manager or member of the Supervisory Board of such credit institution at any time in the preceding 5 years.

3. A member of the Supervisory Board of a credit institution must fully satisfy the following criteria and conditions:

a/ The criteria and conditions specified at Points a and b, Clause 1 of this Article;

b/ Possessing a university or higher degree in finance, banking, economics, business administration, law, accounting or audit;

c/ Having at least 3 years’ experience in the field of finance, banking, accounting or audit;

d/ Not being a related person of a manager of such credit institution;

dd/ Residing in Vietnam during his/her term of office, for the head of the Supervisory Board.

4. The Chief Executive Officer must fully satisfy the following criteria and conditions:

a/ The criteria and conditions specified at Points a and b, Clause 1 of this Article;

b/ Possessing a university or higher degree in finance, banking, economics, business administration, law, accounting or audit;

c/ Satisfying one of the following conditions: having worked for at least 5 years as an executive officer of a credit institution; having worked for at least 5 years as the Chief Executive Officer or Chief Operations Officer of an enterprise with the equity at least equal to the legal capital level for the corresponding type of credit institution and having at least 5 years’ experience in the field of finance, banking, accounting or audit; or having at least 10 years’ experience in the field of finance, banking, accounting or audit;

d/ Residing in Vietnam during his/her term of office.

5. The Chief Operations Officer, Chief Accountant, Branch Director, and Chief Executive Officer of a subsidiary and holders of equivalent titles as specified in the charter of a credit institution must fully satisfy the following criteria and conditions:

a/ Not falling into the cases in which they may not hold the posts specified in Clause 2, Article 42 of this Law; or not falling into the cases in which he/she is not allowed to hold the posts specified in Clause 1, Article 42 of this Law, for the Chief Operations Officer;

b/ Satisfying one of the following conditions: possessing a university or higher degree in finance, banking, economics, business administration, law, accounting or audit or another discipline in the professional field which they will take charge of; possessing a university or higher degree in another discipline and having at least 3 years’ experience in the field of finance or banking or the professional field which they will take charge of;

c/ Residing in Vietnam during their term of office;

d/ The criteria and conditions specified by the accounting law, for the Chief Accountant.

6. The State Bank Governor shall specify criteria and conditions for managers, executive officers and members of the Supervisory Board of cooperative banks, people’s credit funds and microfinance institutions.

Article 42. Cases in which persons may not hold posts

1. The following persons may not act as members of the Board of Directors, members of the Members’ Council, members of the Supervisory Board, Chief Executive Officer, Chief Operations Officer and holders of equivalent titles specified in the charter of a credit institution:

a/ The persons specified in Clause 2 of this Article;

b/ Persons who may not participate in the management and administration of enterprises and cooperatives in accordance with the law on cadres, civil servants and public employees and the law against corruption;

c/ Persons who have acted as owners of sole proprietorships, general partners of partnerships, Chief Executive Officer, members of the Board of Directors, members of the Members’ Council, supervisors, or members of the Supervisory Board of an enterprise; or members of the Board of Directors and Chief Executive Officer of a cooperative at the time such enterprise or cooperative is declared bankrupt, unless they are assigned, designated or appointed to participate in the management, administration and control of enterprises or cooperatives being credit institutions declared bankrupt to meet the task requirements;

d/ Persons who have been suspended from the title of Chairperson or another member of the Board of Directors; the Chairperson or another member of the Members’ Council; Head or another member of the Supervisory Board; or Chief Executive Officer of a credit institution as specified in Article 47 of this Law or is determined by a competent agency to have committed violations, making the credit institution subject to license revocation;

dd/ Related persons of members of the Board of Directors, members of the Members’ Council or Chief Executive Officer of such credit institution, except the cases specified in Clause 3, Article 69; Point b, Clause 1, Article 73; and Point a, Clause 2, Article 77, of this Law;

e/ Related persons of members of the Supervisory Board or Chief Operations Officer of such people’s credit fund;

g/ Persons held responsible under inspection conclusions for the credit institution or foreign bank branch being administratively sanctioned in monetary and banking activities with the highest fine level for acts of violating regulations on license, governance, administration, shares, stocks, capital contribution, share purchase, credit extension, purchase of corporate bonds, and prudential ratio in accordance with the law on handling of administrative violations in monetary and banking activities.

2. The following persons may not hold the post of Chief Accountant, Branch Director or Chief Executive Officer of subsidiaries of credit institutions:

a/ Minors; persons with difficulties in cognition and behavior control; persons with restricted or lost civil act capacity;

b/ Persons who are examined for penal liability or serving imprisonment sentences; are serving administrative handling measures at compulsory drug rehabilitation facilities or compulsory education institutions; or are banned by the court from holding certain posts, practicing certain professions or performing certain jobs;

c/ Persons who have been convicted of serious crimes, very serious crimes or particularly serious crimes;

d/ Persons who have been convicted of the crime of infringing upon ownership but have yet to have their criminal records expunged;

dd/ Cadres, civil servants, public employees and division- or higher-level managers in enterprises in which the State holds 50% or more of charter capital, except persons who are assigned to act as representatives to manage capital contributions of the State or of enterprises in which the State holds 50% or more of charter capital at credit institutions, or who are assigned, designated or appointed to participate in the management, administration and control of credit institutions to meet the task requirements;

e/ Officers, non-commissioned officers, professional soldiers, and defense workers and employees in agencies and units of the Vietnam People’s Army; officers, professional non-commissioned officers and workers in agencies and units of the People’s Public Security forces of Vietnam, except persons assigned to act as representatives to manage capital contributions of the State or of enterprises in which the State holds 50% or more of charter capital at credit institutions;

g/ Other cases as specified in the charter of credit institutions.

3. Wives/husbands, fathers/mothers, children and brothers/sisters of members of the Board of Directors, members of the Members’ Council or Chief Executive Officers of credit institutions and wives/husbands of these persons may not work as Chief Accountants or persons in charge of finance of such credit institutions.

 Article 43. Persons who may not concurrently hold different posts

1. The Chairperson of the Board of Directors or Chairperson of the Members’ Council of a credit institution may not concurrently act as an executive officer or a member of the Supervisory Board of such credit institution and another credit institution or as a manager of another enterprise, except cases in which the Chairperson of the Board of Directors of a people’s credit fund concurrently acts as a member of the Board of Directors or a member of the Supervisory Board of a cooperative bank.

2. A member of the Board of Directors who is not an independent member; or a member of the Members’ Council of a credit institution may not concurrently hold one of the following posts:

a/ An executive officer of such credit institution, except cases in which he/she is the Chief Executive Officer of such credit institution;

b/ A manager or an executive officer of another credit institution, or a manager of another enterprise, except cases in which he/she is a manager or an executive officer of a subsidiary or the parent company of such credit institution or except the case of implementation of an approved mandatory transfer plan;

c/ A supervisor or a member of the Supervisory Board of another credit institution or another enterprise.

3. An independent member of the Board of Directors of a credit institution may not concurrently hold one of the following posts:

a/ An executive officer of such credit institution;

b/ A manager or an executive officer of another credit institution, or a manager of more than 2 other enterprises;

c/ A supervisor or a member of the Supervisory Board of another credit institution or another enterprise.

4. A member of the Supervisory Board of a credit institution may not concurrently hold one of the following posts, except cases in which he/she is a manager, an executive officer or an employee of the credit institution that is the transferee under an approved mandatory transfer plan:

a/ A manager or an executive officer of such credit institution or another credit institution or another enterprise; or an employee of such credit institution or a subsidiary of such credit institution;

b/ An employee of an enterprise of which a member of the Board of Directors, an executive officer or a major shareholder is a member of the Board of Directors or a member of the Members’ Council of such credit institution.

5. The Chief Executive Officer, Chief Operations Officers and holders of equivalent titles as specified in the charter of a credit institution may not concurrently act as managers, executive officers, supervisors and members of the Supervisory Board of another credit institution or another enterprise, except cases in which Chief Operations Officers and holders of equivalent titles as specified in the charter of such credit institution are managers and executive officers of subsidiaries of such credit institution or of the parent company of such credit institution.

Article 44. Approval of a tentative list of persons elected or appointed as members of the Board of Directors, members of the Members’ Council, members of the Supervisory Board, and Chief Executive Officer of a credit institution

1. A tentative list of persons elected or appointed as members of the Board of Directors, members of the Members’ Council, members of the Supervisory Board, and Chief Executive Officer of a credit institution; or as the Chairperson of the Board of Directors and Head of the Supervisory Board of a cooperative bank or people’s credit fund shall be approved in writing by the State Bank before these persons are elected or appointed. Persons elected or appointed as members of the Board of Directors, members of the Members’ Council, members of the Supervisory Board, and Chief Executive Officer of a credit institution; or as the Chairperson of the Board of Directors and Head of the Supervisory Board of a cooperative bank or people’s credit fund must be on the list approved by the State Bank.

2. The State Bank Governor shall specify dossiers and procedures for approving tentative lists of persons elected or appointed to hold the titles specified in Clause 1 of this Article.

3. A credit institution shall notify the State Bank of its list of persons elected or appointed to hold the titles specified in Clause 1 of this Article within 10 days from the date of election or appointment.

Article 45. Cases of automatic loss of status

1. A member of the Board of Directors, a member of the Members’ Council, a member of the Supervisory Board or the Chief Executive Officer of a credit institution shall have his/her membership status or post lost when:

a/ He/she falls into one of the cases in which he/she may not hold one of the posts specified in Article 42 of this Law;

b/ He/she is the representative of the capital contribution of an organization that is a shareholder or capital contributor of the credit institution when such organization ceases to exist;

c/ He/she is no longer the authorized representative of the capital contribution of an institutional shareholder or capital contributor;

d/ He/she is expelled from the territory of the Socialist Republic of Vietnam;

dd/ The credit institution has its license revoked;

e/ The Chief Executive Officer hiring contract has expired;

g/ He/she is no longer a member of the cooperative bank or people’s credit fund;

h/ He/she is dead.

2. The Board of Directors or Members’ Council of a credit institution shall send a report enclosed with documents evidencing a post holder’s automatic loss of his/her status under Point a, b, c, d, e, g or h, Clause 1 of this Article to the State Bank within 5 working days after the date of automatic loss of such post holder’s status and take responsibility for the accuracy and truthfulness of such report; and carry out procedures for electing or appointing a new holder for the vacant post in accordance with law.

3. After his/her membership status or post is automatically lost, a member of the Board of Directors, a member of the Members’ Council, a member of the Supervisory Board or the Chief Executive Officer of a credit institution shall still be held responsible for his/her decisions made during his/her term of office.

Article 46. Relief from duty, removal from office

1. Except the cases of automatic loss of membership status or post specified in Article 45 of this Law, the Chairperson or a member of the Board of Directors; the Chairperson or a member of the Board of Members; the Head or a member of the Supervisory Board; or the Chief Executive Officer of a credit institution shall be relieved from duty or removed from office in one of the following cases:

a/ He/she shall be relieved from duty if he/she submits his/her resignation to the Board of Directors, Members’ Council or Supervisory Board of the credit institution;

b/ He/she shall be removed from office if he/she has not joined activities of the Board of Directors, Members’ Council or Supervisory Board for 6 consecutive months, except a force majeure event;

c/ He/she shall be removed from office if he/she no longer satisfies the criteria and conditions specified in Article 41 of this Law;

d/ He/she shall be removed from office if he/she is an independent member of the Board of Directors and fails to satisfy the requirements specified in Clause 2, Article 41 and Clause 3, Article 43 of this Law;

dd/ Other cases of relief of duty and removal from office specified in the charter of the credit institution.

2. After being relieved from duty or removed from office, the Chairperson or a member of the Board of Directors; the Chairperson or a member of the Members’ Council; the Head or a member of the Supervisory Board; or the Chief Executive Officer of a credit institution shall still be held responsible for his/her decisions made during his/her term of office.

3. Within 10 days after approving a decision on relief from duty or removal from office of a post holder specified in Clause 1 of this Article, the Board of Directors or Members’ Council of a credit institution shall send a report enclosed with relevant documents to the State Bank.

Article 47. Termination or suspension of the exercise of rights and performance of obligations of members of the Board of Directors, Members’ Council and Supervisory Board and executive officers of a credit institution

1. The State Bank may terminate or suspend the exercise of the rights and performance of obligations of the Chairperson and members of the Board of Directors, the Chairperson and members of the Members’ Council, the Head and members of the Supervisory Board, and executive officers of a credit institution who violate Article 43, and Clause 10, Article 48, of this Law or other relevant regulations while exercising their rights and performing their obligations or fail to satisfy the criteria and conditions specified in Article 41 of this Law; and request competent agencies to relieve from duty or remove from office these persons, or elect, appoint, or designate, when deeming it necessary, other persons as replacements.

2. The Special Control Board may terminate or suspend the exercise of the rights and performance of obligations of the Chairperson and members of the Board of Directors, the Chairperson and members of the Members’ Council, the Head and members of the Supervisory Board, and executive officers of a credit institution placed under special control, when deeming it necessary.

3. A person who is terminated or suspended from exercising his/her rights and performing his/her obligations under Clause 1 or 2 of this Article shall take part in addressing problems and handling violations related to his/her personal responsibilities when so requested by the State Bank, Board of Directors, Members’ Council or Supervisory Board of his/her credit institution or the Special Control Board.

Article 48. Rights and obligations of managers and executive officers of credit institutions

1. To abide by law and charters of credit institutions, and resolutions and decisions of General Meeting of Shareholders, General Meeting of Members, owners and capital contributors of credit institutions.

2. To exercise their rights and perform their obligations honestly and prudently in the interests of credit institutions and shareholders, capital contributors and owners of credit institutions.

3. To refrain from using information, secrets and business opportunities of credit institutions and abusing their positions and posts and assets of credit institutions for self-seeking purposes or in the interests of other organizations and individuals, thereby harming the interests of credit institutions and shareholders, capital contributors and owners of credit institutions.

4. To take responsibility for the observance of regulations on restrictions to ensure safety in banking activities of credit institutions in accordance with this Law.

5. To keep dossiers and records of credit institutions in order to provide statistics serving the management, administration and control of all activities of credit institutions and for the State Bank’s inspection, supervision and examination activities.

6. To be knowledgeable about risks in the operation of credit institutions.

7. To promptly, fully and accurately notify credit institutions of their benefits in other institutions or their transactions with other organizations and individuals that are likely to cause conflicts of interests of credit institutions, and to take part in such transactions only when so consented by the Board of Directors or Members’ Council.

8. To refrain from creating conditions for themselves or their related persons to take loans or use other banking services of credit institutions with conditions more preferential and favorable than those under general regulations of credit institutions.

9. To refrain from having their remunerations or salaries increased or requesting bonuses for them when credit institutions suffer losses.

10. To fulfill, within the ambit of their rights and obligations, written requests of the State Bank with regard to contents falling within the latter’s competence; to implement operational risk and safety recommendations or warnings, or warnings about risks that are likely to lead to violations of the monetary and banking regulations; and execute inspection conclusions, recommendations and decisions.

11. To exercise other rights and perform other obligations in accordance with law and charters of credit institutions.

Article 49. Provision and public disclosure of information

1. Members of the Board of Directors, members of the Board of Members, members of the Supervisory Board, Chief Executive Officer, Chief Operations Officers and holders of equivalent titles as specified in the charter of a credit institution shall provide the credit institution with the following information:

a/ Names and identification numbers of enterprises, addresses of head offices of enterprises and other economic organizations in which they or they and their related persons own capital contributions or shares equal to 5% or more of the charter capital, including also capital contributions and shares authorized or entrusted to other organizations and individuals to hold;

b/ Names and identification numbers of enterprises, addresses of head offices of enterprises and other economic organizations of which they and their related persons are members of the Board of Directors, members of the Members’ Council, supervisors, members of the Supervisory Board, or the Chief Executive Officer;

c/ Information about their related persons who are individuals, including: full names; personal identification numbers; citizenships, passport numbers, dates and places of passport issuance, for foreigners; and relationship with the information providers;

d/ Information about their related persons that are institutions, including: names, identification numbers and addresses of head offices of enterprises, serial numbers of enterprise registration certificates or equivalent legal documents; legal representatives and relationship with the information providers.

2. Shareholders that own 1% or more of the charter capital of a credit institution each shall provide the credit institution with the following information:

a/ Full names; personal identification numbers; citizenships, passport numbers, dates and places of passport issuance, for foreign shareholders; serial numbers of enterprise registration certificates or equivalent legal documents, for institutional shareholders; dates and places of issuance of such documents;

b/ Information about their related persons as specified at Points c and d, Clause 1 of this Article;

c/ Number of their shares and their shareholding rates in the credit institution;

d/ Number of shares and shareholding rates of their related persons in the credit institution.

3. A subject specified in Clause 1 or 2 of this Article shall send to the credit institution a document on initial provision of information and a document on change in such information within 7 working days from the date of information occurrence or change.

For the information specified at Points c and d, Clause 2 of this Article, shareholders are only required to provide it to the credit institution when there is a change in their shareholding rates or in their and their related persons’ shareholding rates which is equal to 1% or more of the charter capital of the credit institution as compared to the preceding time of information provision.

4. A credit institution shall post and keep the information specified in Clauses 1 and 2 of this Article at its head office and send a written report to the State Bank within 7 working days after receiving the provided information. Annually, a credit institution shall disclose the information specified at Points a, b and d, Clause 1 and Points a, c and d, Clause 2 of this Article to its General Meeting of Shareholders, General Meeting of Members and Members’ Council.

5. A credit institution shall publicly disclose information about full names of individuals and names of institutional shareholders each owning 1% or more of its charter capital and the information specified at Points c and d, Clause 2 of this Article on its website within 7 working days after receiving the provided information.

6. Subjects required to provide and publicly disclose information shall ensure that the provided and publicly disclosed information is truthful, accurate, adequate and timely and take responsibility for such information provision and public disclosure.

Section 2

GENERAL PROVISIONS ON CREDIT INSTITUTIONS BEING JOINT-STOCK COMPANIES OR LIMITED LIABILITY COMPANIES

Article 50. Board of Directors or Members’ Council and its structure

1. The Board of Directors or Members’ Council is a managerial body having the full powers to decide and exercise rights and perform obligations of a credit institution on its behalf, except matters falling within the competence of the General Meeting of Shareholders or owner.

2. In case the number of members of the Board of Directors or Members’ Council is smaller than the minimum number of members specified in Clause 1, Article 69 and at Point a, Clause 1, Article 73 of this Law, within 90 days after the number of members becomes smaller than the required minimum number, the credit institution shall additionally elect members to ensure the required minimum number of members, except the case specified in Clause 5, Article 166 of this Law.

3. The Board of Directors or Members’ Council may use the seal of the credit institution to perform its tasks and exercise its powers.

4. The Board of Directors or Members’ Council may have its assistant division. Functions and tasks of such an assistant division shall be defined by the Board of Directors or Members’ Council.

5. The Board of Directors or Members’ Council shall set up committees to assist it in performing its tasks and exercising its powers, including the Risk Management Committee and Personnel Committee. The Board of Directors or Members’ Council shall define tasks and powers of these two Committees under regulations of the State Bank Governor.

Article 51. Supervisory Board

1. The Supervisory Board shall supervise and evaluate the observance of law, internal regulations, charter, and resolutions and decisions of the General Meeting of Shareholders or owners and the Board of Directors or Members’ Council.

2. The Supervisory Board of a commercial bank must have at least 5 members. The Supervisory Board of a credit institution other than a commercial bank must have at least 3 members. The number of the Supervisory Board of a credit institution is stated in the charter of such credit institution.

3. The Supervisory Board has an internal audit division and an assisting division to perform its tasks.

4. The term of office of the Supervisory Board must not exceed 5 years. The term of office of members of the Supervisory Board follows the term of office of the Supervisory Board, except the case specified in Clause 5 of this Article. The term of office of an added or member of the Supervisory Board is the remaining term of office of the Supervisory Board. The outgoing Supervisory Board may continue to operate until the incoming Supervisory Board takes over its work.

5. The term of office of the Head and other members of the Supervisory Board of a credit institution being a single-member limited liability company is stated in the charter of such credit institution but must not exceed 5 years.

6. In case the number of members of the Supervisory Board of a credit institution is smaller than the minimum number of members specified in Clause 2 of this Article, within 90 days after the number of members becomes smaller than the required minimum number, such credit institution shall additionally elect members to ensure the required minimum number of members, except the case specified in Clause 5, Article 166 of this Law.

Article 52. Tasks and powers of the Supervisory Board of a credit institution

1. To supervise the management and administration of the credit institution in the observance of law, internal regulations and charter of the credit institution, and resolutions and decisions of the General Meeting of Shareholders, owners and the Board of Directors or Members’ Council; to take responsibility before the General Meeting of Shareholders, owners and capital contributors for the performance of its tasks and powers in accordance with this Law and the charter of the credit institution.

2. To issue its internal regulations; to annually review its internal regulations and the credit institution’s internal regulations regarding accounting and reporting.

3. To carry out internal audit; to access and be provided with adequate and accurate information and documents on the management and administration of the credit institution, and have the right to use resources of the credit institution for performance of its assigned tasks and exercise of its vested powers; to hire independent experts and consultants and outsiders to serve performance of its tasks while being still held responsible for performance of its tasks.

4. To supervise the financial status and appraise biannual and annual financial statements of the credit institution; to report to the General Meeting of Shareholders, owners and capital contributors on results of the appraisal of financial statements; to evaluate the reasonability, lawfulness, truthfulness and prudence in accounting and statistical work and preparation of financial statements. The Supervisory Board may consult the Board of Directors or Members’ Council before submitting its reports and recommendations to the General Meeting of Shareholders or owners or capital contributors.

5. To supervise the approval and implementation of investment projects, purchase and sale of fixed assets, contracts and other transactions of the credit institution that fall within the competence of the General Meeting of Shareholders, Board of Directors or Members’ Council; to annually make and send reports on supervision results to the General Meeting of Shareholders, owners, the Board of Directors or Members’ Council.

6. To supervise the observance of the provisions of Chapter VII of this Law regarding restrictions to ensure safety of operation of the credit institution.

7. To examine accounting books, other documents and the management and administration of operation of the credit institution when deeming it necessary or in the following cases:

a/ It is so required under resolutions or decisions of the General Meeting of Shareholders;

b/ It is so requested by the State Bank or major shareholders or groups of major shareholders or owners or capital contributors or the Members’ Council in accordance with law. The examination shall be carried out within 7 working days after a request is received. Within 15 days after completing the examination, the Supervisory Board shall report on and explain matters requested for examination to the requesting organizations and individuals.

8. To promptly notify the General Meeting of Shareholders, owners, the Board of Directors or Members’ Council when detecting a manager or an executive officer of the credit institution committing a violation of law, the Charter or internal regulations of the credit institution, or a resolution or decision of the General Meeting of Shareholders, owners, the Board of Directors or Members’ Council; to request violators to immediately terminate their violations and remedy consequences (if any).

9. To draw up a list of founding shareholders within 5 years from the date they become founding shareholders, shareholders each holding 1% or more of the charter capital, capital contributors and related persons of members of the Board of Directors, members of the Members’ Council, members of the Supervisory Board and the Chief Executive Officer of the credit institution, or shareholders each holding 1% or more of the charter capital; to keep and update changes to this list.

10. To request the Board of Directors or Members’ Council to convene extraordinary meetings or request the Board of Directors to convene extraordinary meetings of the General Meeting of Shareholders in accordance with this Law and the charter of the credit institution.

11. To convene an extraordinary meeting of the General Meeting of Shareholders when the Board of Directors makes a decision seriously violating this Law or falling beyond its powers or in other cases as stated in the charter of the credit institution.

12. To appoint, relieve from duty, discipline, terminate the work of, and decide on salaries and other benefits for, title holders in the internal audit division.

13. To promptly report to the State Bank on acts violating the provisions of Clauses 6, 8 and 11 of this Article and acts violating this Law’s provisions on shareholding rates, capital contributions and related persons.

14. To perform other tasks and exercise other powers in accordance with law and the charter of the credit institution.

Article 53. Rights and obligations of the Head of the Supervisory Board of a credit institution

1. To organize the performance of tasks and the exercise of powers of the Supervisory Board specified in Article 52 of this Law and take responsibility for the performance of his/her tasks and exercise of his/her powers.

2. To convene and chair meetings of the Supervisory Board.

3. On behalf of the Supervisory Board, to sign documents falling within the Supervisory Board’s competence.

4. On behalf of the Supervisory Board, to convene extraordinary meetings of the General Meeting of Shareholders under Clause 11, Article 52 of this Law or request the Board of Directors or Members’ Council to convene extraordinary meetings.

5. To attend meetings of the Board of Directors or Members’ Council, and give opinions at these meetings but have no voting rights.

6. To request the inclusion of his/her opinions in minutes of meetings of the Board of Directors or Members’ Council if such opinions are different from resolutions and decisions of the Board of Directors or Members’ Council and report such before the General Meeting of Shareholders or owners or capital contributors.

7. To prepare working plans of the Supervisory Board and assign specific tasks to each member of the Supervisory Board.

8. To ensure that members of the Supervisory Board receive adequate, objective and accurate information and have enough time to discuss matters subject to consideration by the Supervisory Board.

9. To supervise and direct members of the Supervisory Board in performing their tasks and obligations and exercising their rights.

10. To authorize another member of the Supervisory Board to exercise his/her rights and perform obligations only when he/she is absent or unable to perform his/her tasks.

11. To exercise other rights and perform other obligations in accordance with law and the charter of the credit institution.

Article 54. Rights and obligations of members of the Supervisory Board of a credit institution

1. To observe law, the charter of the credit institution and internal regulations of the Supervisory Board, and perform their tasks as assigned by the Head of the Supervisory Board for the performance of tasks and exercise of powers of the Supervisory Board in an honest and prudent manner in the interests of the credit institution and its shareholders, capital contributors and owners; to take responsibility for the exercise of their rights and performance of their obligations.

2. To elect a member of the Supervisory Board to act as the Head of the Supervisory Board, except the case specified at Point c, Clause 1, Article 73 of this Law.

3. To request the Head of the Supervisory Board to convene an extraordinary meeting of the Supervisory Board.

4. To control business activities, accounting books, assets and financial statements, and recommend remedial measures.

5. To request managers to report and explain the financial status and business results of subsidiaries; development investment plans, projects and programs, and other decisions in the management and administration of the credit institution.

6. To request managers, executive officers and employees of the credit institution to provide statistics and explain business activities in order to perform their assigned tasks.

7. To report on abnormal financial activities of the credit institution to the Head of the Supervisory Board and take responsibility for their own evaluation and conclusions.

8. To attend meetings of the Supervisory Board; to discuss and vote on matters falling within the ambit of tasks and powers of the Supervisory Board, except those involving conflicts of their interests.

9. To exercise other rights and perform other obligations in accordance with law and the charter of the credit institution.

Article 55. Chief Executive Officer of a credit institution

1. The Board of Directors or Members’ Council and owners shall appoint the Chief Executive Officer with a term of office not exceeding 5 years.

2. The Chief Executive Officer is the supreme executive officer of the credit institution and shall take responsibility before the Board of Directors or Members’ Council and owners for the performance of his/her rights and performance of his/her obligations.

3. In case the post of Chief Executive Officer is vacant, the Board of Directors or Members’ Council and owners of the credit institution shall appoint the Chief Executive Officer within 90 days after such post is vacant.

Article 56. Rights and obligations of the Chief Executive Officer of a credit institution

1. To organize the implementation of resolutions and decisions of the General Meeting of Shareholders, Board of Directors or Members’ Council.

2. To decide on matters related to day-to-day business activities of the credit institution that fall within his/her competence.

3. To set up the internal control system and maintain its effective operation.

4. To make and submit financial statements to the Board of Directors or Members’ Council for approval or for reporting to competent authorities for approval; to take responsibility for the accuracy and truthfulness of financial statements, statistical reports, account-finalization statistics and other financial information.

5. To issue according to his/her competence internal regulations; professional processes and procedures for operating the business administration system and management information system.

6. To report to the Board of Directors or Members’ Council, Supervisory Board, General Meeting of Shareholders and competent state agencies on business activities and results of the credit institution.

7. To decide on the application of measures beyond his/her competence in cases of disasters, enemy sabotage, fires and incidents and take responsibility for these decisions and promptly report them to the Board of Directors or Members’ Council.

8. To recommend and propose the organizational and managerial  structure of the credit institution to the Board of Directors or Members’ Council or the General Meeting of Shareholders for decision according to its competence.

9. To request the Board of Directors or Members’ Council to convene extraordinary meetings.

10. To appoint, relieve from duty or remove from office holders of managerial and executive officer titles of the credit institution, except those to be decided by the General Meeting of Shareholders, owners, capital contributors, Board of Directors or Members’ Council.

11. To sign contracts or enter into other transactions in the name of the credit institution in accordance with the Charter and internal regulations of the credit institution.

12. To propose plans on use of profits and handling of losses incurred in business activities of the credit institution.

13. To recruit employees; to decide on salaries and bonuses of employees according to his/her competence.

14. To exercise other rights and perform other obligations in accordance with law and the charter of the credit institution.

Article 57. Internal control system

1. An internal control system is the combination of mechanisms, policies, processes, internal regulations and organizational structure of a credit institution which shall be implemented in order to assure the prevention and prompt detection and handling of risks.

2. A credit institution shall build its internal control system in order to meet the following requirements:

a/ Efficient and safe operation; safe and efficient protection, management and use of assets and resources;

b/ Truthful, rational, adequate and prompt financial and managerial information system;

c/ Observance of the law and mechanisms, policies, processes and internal regulations.

3. The State Bank may request a credit institution to hire an independent audit firm to evaluate part or the whole of its internal control system when deeming it necessary.

4. Credit institutions shall build their internal control systems and organize the application of technology in internal control activities under regulations of the State Bank Governor.

Article 58. Internal audit

1. A credit institution shall set up its internal audit division under its Supervisory Board for carrying out internal audit of the credit institution.

2. The internal audit division shall review and independently and objectively evaluate the appropriateness and compliance with mechanisms, policies, processes and internal regulations of the credit institution; and make recommendations in order to improve the efficiency of systems, processes and regulations, thus contributing to ensuring safe, efficient and lawful operation of the credit institution.

3. Internal audit results shall be reported to the Supervisory Board and sent to the Board of Directors or Members’ Council and the Chief Executive Officer of the credit institution.

Article 59. Independent audit

1. Before a fiscal year ends, a credit institution shall select an independent audit firm that meets the requirements set by the State Bank Governor to audit its financial statements and provide services to secure operation of the internal control system in the preparation and presentation of financial statements in the subsequent fiscal year.

2. Within 30 days after deciding to select an independent audit firm, a credit institution shall notify the State Bank of the selected independent audit firm.

Section 3

CREDIT INSTITUTIONS BEING JOINT-STOCK COMPANIES

Article 60. Types of shares, shareholders

1. Credit institutions being joint-stock companies must have common shares. Owners of common shares are referred to as common shareholders.

2. Credit institutions being joint-stock companies may have preferred shares. Owners of preferred shares are referred to as preferred shareholders. Preferred shares take the following types:

a/ Dividend preferred shares;

b/ Voting preferred shares.

3. Dividend preferred shares are shares for which the paid dividends are higher than those paid for common shares or higher than annual stable dividends. Annual dividends include fixed dividends and bonus dividends. Fixed dividends do not depend on business results of a credit institution and may be paid only when the credit institution earns profits. When a credit institution suffers losses or earns profits but such profits are not enough for paying fixed dividends, fixed dividends to be paid for dividend preferred shares shall be accrued in subsequent years. Specific levels of fixed dividends and method of determining bonus dividends shall be decided by the General Meeting of Shareholders and indicated on stocks of dividend preferred shares. The total par value of dividend preferred shares must not exceed 20% of the charter capital of a credit institution.

Members of the Board of Directors, members of the Supervisory Board, the Chief Executive Officer and other managers and executive officers of a credit institution may not purchase dividend preferred shares issued by such credit institution. Eligible purchasers of dividend preferred shares shall be defined in the charter of a credit institution or decided by the General Meeting of Shareholders.

Dividend preferred shareholders have the rights and obligations like common shareholders, except the rights to vote, attend meetings of the General Meeting of Shareholders and nominate candidates for the Board of Directors and Supervisory Board.

4. Only institutions authorized by the Government and founding shareholders may hold voting preferred shares. The right to hold voting preferred shares of founding shareholders is valid for only 3 years after a credit institution is issued a license. Past that time limit, voting preferred shares of founding shareholders shall be converted into common shares. Voting preferred shareholders have the rights and obligations like common shareholders, except the right to transfer such shares to others.

5. Common shares may not be converted into preferred shares. Preferred shares may be converted into common shares under resolutions of the General Meeting of Shareholders.

6. A credit institution being a joint-stock company must have at least 100 shareholders without any restriction on the maximum number of shareholders, except credit institutions placed under special control and commercial banks subject to mandatory transfer and currently implementing a mandatory transfer plan under Section 4, Chapter X of this Law.

Article 61. Rights of common shareholders of a credit institution

1. To attend and give opinions at meetings of the General Meeting of Shareholders and exercise the voting rights directly or through their authorized representatives. Each common share has one vote.

2. To receive dividends under resolutions of the General Meeting of Shareholders.

3. To have preemptive right to purchase newly offered shares in proportion to their common shareholding rates in the credit institution.

4. To transfer their shares and the right to purchase shares to other shareholders of the credit institution or to other organizations or individuals in accordance with this Law and the charter of the credit institution.

5. To check, search or extract information about names and contact addresses on the list of shareholders with the voting right; to request modification of inaccurate information about them.

6. To check, search, extract or photocopy the charter of the credit institution, books of minutes of meetings of the General Meeting of Shareholders and resolutions and decisions of the General Meeting of Shareholders.

7. To receive part of the remaining assets divided in proportion to the number of their shares in the credit institution when the credit institution is dissolved or bankrupt.

8. To authorize in writing others to exercise their rights and perform their obligations. Authorized persons may not stand as candidates in their own capacity.

9. To stand as candidates or nominate others to the Board of Directors or Supervisory Board in accordance with the charter of the credit institution or in accordance with law if such is not provided in the charter of the credit institution. The list of candidates shall be sent to the Board of Directors within a time limit set by the Board of Directors.

10. Shareholders or groups of shareholders each holding 5% or more of the total common shares or a lower percentage as stated in the charter of the credit institution may nominate candidates to the Board of Directors or Supervisory Board.

Article 62. Obligations of common shareholders

1. Shareholders of a credit institution shall perform the following obligations:

a/ To make full payment for the number of shares they commit to purchase within the time limit set by the credit institution; to take responsibility for debts and other asset obligations of the credit institution within the limit of share capital already contributed to the credit institution;

b/ To refrain from withdrawing the contributed share capital from the credit institution in any form which results in the decrease of the charter capital of the credit institution, except the case specified in Article 65 of this Law;

c/ To take responsibility before law for the lawfulness of capital amounts used as contributions to or used to purchase or acquire shares from the credit institution; to refrain from using capital amounts allocated by the credit institution or foreign bank branch as credit extension or capital amounts received through the issuance of corporate bonds for purchasing or acquiring shares from the credit institution; to refrain from contributing capital to or purchasing shares from the credit institution in the name of other individuals or legal entities in any form, except the case of entrustment in accordance with law;

d/ To comply with the charter and internal regulations of the credit institution;

dd/ To observe resolutions and decisions of the General Meeting of Shareholders and Board of Directors;

e/ When acting in the name of the credit institution in any form, to take responsibility for any law-breaking acts they have committed or business activities and other transactions they have carried out for self-seeking purposes or in the interests of other institutions or individuals;

g/ To ensure confidentiality of information provided by the credit institution in accordance with law and the charter of the credit institution; to use the provided information only for exercise and protection of their lawful rights and interests; to refrain from dispersing, copying and sending information provided by the credit institution to other institutions and individuals.

2. Shareholders entrusted to make investment for other institutions or individuals shall provide the credit institution with information on real holders of the shares they are entrusted to make investment in the credit institution. The credit institution may terminate the shareholder’s rights of shareholders entrusted to make investment in case such shareholders fail to provide information or fail to provide adequate and accurate information on real owners of shares.

Article 63. Shareholding rates

1. An individual shareholder may not hold over 5% of the charter capital of a credit institution.

2. An institutional shareholder may not hold over 10% of the charter capital of a credit institution.

3. A shareholder and his/her/its related persons may not hold over 15% of the charter capital of a credit institution. A major shareholder of a credit institution and his/her/its related persons may not hold 5% or more of the charter capital of another credit institution. 

4. The provisions of Clauses 2 and 3 of this Article are not applicable to the following cases:

a/ Holding of shares in a subsidiary or an affiliated company being a credit institution specified in Clause 2 or 3, Article 111 of this Law;

b/ Holding of state shares in an equitized credit institution;

c/ Holding of shares by foreign investors specified in Clause 7 of this Article.

5. The shareholding rates specified in Clauses 1 and 2 of this Article include also those for indirectly owned shares. The shareholding rates specified in Clause 3 of this Article include also those for shares entrusted by shareholders to other share-purchasing organizations or individuals and exclude those for shares held by related persons being subsidiaries of such shareholders as specified at Point a, Clause 9, Article 4 of this Law.  

6. Within 5 years after a credit institution is issued a license, founding shareholders of the credit institution must hold shares at least equal to 50% of the charter capital of the credit institution; founding shareholders being legal entities must hold shares at least equal to 50% of the total shares held by founding shareholders.

7. Foreign investors may purchase shares of Vietnamese credit institutions. The Government shall set the total maximum shareholding rate for foreign investors, the maximum shareholding rate for an institutional foreign investor, and the maximum shareholding rate for a foreign investor and his/her/its related persons in a Vietnamese credit institution; and specify conditions and procedures for foreign investors to purchase shares of Vietnamese credit institutions; and conditions for Vietnamese credit institutions to sell shares to foreign investors.

Article 64. Offering and transfer of shares

1. Individual shareholders and institutional shareholders whose representatives of capital contributions  in a credit institution are members of the Board of Directors, members of the Supervisory Board or Chief Executive Officer of such credit institution may not transfer their shares during their term of office.

Representatives of capital contributions mentioned in this Clause exclude representatives of the State’s capital contributions in credit institutions.

2. During the remediation of consequences caused by personal responsibility under resolutions or decisions of the General Meeting of Shareholders or decisions of the State Bank, members of the Board of Directors, members of the Supervisory Board or the Chief Executive Officer of a credit institution may not transfer their shares, unless:

a/ They act as authorized representatives of institutional shareholders that are merged, consolidated, divided, split, dissolved or bankrupt in accordance with law;

b/ They are compelled to transfer their shares under legally effective court judgments or rulings;

c/ They transfer their shares to other investors for implementation of approved recovery plans, plans on transfer of the whole of capital contributions or mandatory transfer plans.

3. The transfer of listed shares and shares registered for trading of credit institutions must comply with the securities law.

4. Within 5 years after a credit institution is issued a license, founding shareholders of the credit institution may only transfer their common shares or dividend preferred shares to other founding shareholders provided that they ensure the shareholding rates specified in Article 63 of this Law.

Article 65. Redemption of shares of shareholders

A credit institution may redeem shares from its shareholders if, after fully paying for the redeemed shares, it still ensures prudential ratios in banking activities and the real value of its charter capital does not fall below its legal capital.

Article 66. Stocks

When stocks are issued as certificates, credit institutions shall issue these stocks to shareholders within 30 days from the date of operation commencement, for newly established credit institutions, or within 30 days after their shareholders fully pay for shares they commit to purchase, for credit institutions increasing their charter capital.

Article 67. General Meeting of Shareholders

1. The General Meeting of Shareholders shall hold an annual meeting within 4 months after the end of a fiscal year.

2. The Board of Directors shall convene an extraordinary meeting of the General Meeting of Shareholders in the following cases:

a/ The Board of Directors deems such meeting necessary in the interests of the credit institution;

b/ The number of the Board of Directors’ remaining members is smaller than the required minimum number of members specified in Clause 1, Article 69 of this Law;

c/ The number of the Supervisory Board’s remaining members is smaller than the required minimum number of members specified in Clause 2, Article 51 of this Law;

d/ At the request of a shareholder or a group of shareholders that hold(s) over 10% of total common shares or a lower percentage as stated in the charter of the credit institution;

dd/ At the request of the Supervisory Board;

e/ At the request of the State Bank to decide on relevant contents upon the occurrence of an event affecting the operation safety of the credit institution;

g/ Other cases specified in the charter of the credit institution.

3. The General Meeting of Shareholders is composed of all shareholders with the voting right and is the supreme decision-making body of a credit institution being a joint-stock company. The General Meeting of Shareholders has the following tasks and powers:

a/ To approve development orientations of the credit institution;

b/ To approve, modify or supplement the charter of the credit institution;

c/ To approve regulations on organization and operation of the Board of Directors and Supervisory Board;

d/ To decide on the number of members of the Board of Directors and Supervisory Board in each term of office; to elect, relieve from duty, remove from office, add or replace members of the Board of Directors and Supervisory Board based on the criteria and conditions specified in this Law and the charter of the credit institution;

dd/ To decide on remuneration, bonuses and other benefits for members of the Board of Directors and members of the Supervisory Board and on operating budgets of the Board of Directors and Supervisory Board;

e/ To consider and handle according to its competence violations committed by the Board of Directors or Supervisory Board which cause damage to the credit institution and its shareholders;

g/ To decide on the organizational and managerial structure of the credit institution;

h/ To approve plans on adjustment of the charter capital; to approve share offering plans, covering types and quantity of new shares to be offered;

i/ To approve plans on redemption of sold shares;

k/ To approve plans on issuance of convertible bonds;

l/ To approve the plans specified in Article 143 of this Law;

m/ To approve annual financial statements, and plans on distribution of profits after the credit institution’s tax and other financial obligations are fulfilled;

n/ To approve reports of the Board of Directors and Supervisory Board on the performance/exercise of their tasks and powers;

o/ To decide on the establishment or transformation the legal form of overseas commercial presence and subsidiaries of the credit institution;

p/ To approve plans on contribution of capital to and purchase and sale of shares or capital contributions of the credit institution in enterprises or other credit institutions, with the projected value of capital contributions or purchase price or book value in case of sale of shares or capital contributions accounting for 20% or more of the credit institution’s charter capital indicated in the audited latest financial statement or any lower percentage as stated in the charter of the credit institution;

q/ To approve decisions on investment in or purchase and sale of the credit institution’s fixed assets, with the projected investment amount, purchase price or historical price in case of sale of fixed assets accounting for 20% or more of the credit institution’s charter capital indicated in the audited latest financial statement or any lower percentage as stated in the charter of the credit institution;

r/ To approve contracts or other transactions with their value accounting for 20% or more of the credit institution’s charter capital indicated in the audited latest financial statement or any lower percentage as stated in the charter of the credit institution, between the credit institution and members of the Board of Directors, members of the Supervisory Board, the Chief Executive Officer, or major shareholders of the credit institution; related persons of managers, members of the Supervisory Board or major shareholders of the credit institution; or subsidiaries or affiliated companies of the credit institution, except commercial banks currently implementing mandatory transfer plans;

s/ To decide on the division, splitting, consolidation, merger, transformation or dissolution of, or request a court to open bankruptcy procedures for, the credit institution;

t/ To decide on selection of independent audit firms under Article 59 of this Law;

u/ To decide on solutions to major financial changes of the credit institution.

4. Decisions of the General Meeting of Shareholders shall be approved according to the following provisions:

a/ The General Meeting of Shareholders shall approve decisions falling within its competence by voting at meetings or sending written requests for opinion;

b/ Except the cases specified at Points c, d and dd of this Clause, a decision of the General Meeting of Shareholders shall be approved when it is consented to by shareholders representing over 50% of total votes of all attending shareholders, or when it is consented to by shareholders representing over 50% of total votes of all shareholders in case of sending of written requests for opinion or any higher percentage as stated in the charter of the credit institution;

c/ Decisions on the matters specified at Points h and q, Clause 3 of this Article shall be approved when they are consented to by shareholders representing over 65% of total votes of all attending shareholders or when they are consented to by shareholders representing over 50% of total votes of all shareholders in case of sending of written requests for opinion or any higher percentage as stated in the charter of the credit institution;

d/ Decisions on the matters specified at Point s, Clause 3 of this Article shall be approved when they are consented to by shareholders representing over 65% of total votes of all attending shareholders or any higher percentage as stated in the charter of the credit institution;

dd/ Members of the Board of Directors and Supervisory Board shall be elected on the basis of accrued votes.

5. Decisions on the matters specified at Points a, d, e and s, Clause 3 of this Article shall be approved by voting at meetings of the General Meeting of Shareholders.

Article 68. Reporting on resolutions and decisions of the General Meeting of Shareholders

Within 15 days after concluding a meeting of the General Meeting of Shareholders or after finishing the vote counting in case of sending of written requests for opinion, a credit institution shall send all resolutions and decisions approved by the General Meeting of Shareholders to the State Bank.

Article 69. Board of Directors of a credit institution being a joint-stock company

1. The Board of Directors of a credit institution being a joint-stock company must have between 5 members and 11 members. The number of members for each term of office shall be decided by the General Meeting members. The Board of Directors must have at least 2 independent members, and have two-thirds of its total members being independent members and members who are not executive officers of the credit institution.

2. The term of office of the Board of Directors must not exceed 5 years. The term of office of members of the Board of Directors follows that of the Board of Directors. The term of office of added or replaced members of the Board of Directors is the remaining duration of the term of office of the Board of Directors. The outgoing Board of Directors may continue to operate until the incoming Board of Directors takes over its work.

3. An individual and his/her related persons or representatives of capital contributions of an institutional shareholder and their related persons may participate in the Board of Directors in a number not exceeding 2, for credit institution being joint-stock companies, unless they are representatives of the State’s capital contributions or mandatory transferees.

4. The Board of Directors shall take responsibility before the General Meeting of Shareholders for performance of its tasks and exercise of its powers in accordance with this Law and the charter of the credit institution.

Article 70. Tasks and powers of the Board of Directors of a credit institution being a joint-stock company

1. To organize the establishment and operation commencement of the credit institution after the first meeting of the General Meeting of Shareholders.

2. To submit to the General Meeting of Shareholders for decision and approval matters falling within the ambit of its task and powers as specified in Clause 3, Article 67 of this Law.

3. To decide on the establishment of branches, representative offices and non-business units of the credit institution.

4. To appoint, relieve from duty, discipline, suspend the work of, and decide on salaries, bonuses and other benefits for, the Chief Executive Officer, Chief Operations Officers and other executive officers under its internal regulations.

5. To appoint representatives of capital contributions of the credit institution in enterprises and other credit institutions.

6. To approve plans on contribution of capital to and purchase and sale of shares and capital contributions of the credit institution in enterprises or other credit institutions with the projected value of capital contributions or purchase price or book value in case of sale of shares or capital contributions accounting for under 20% of the credit institution’s charter capital indicated in the audited latest financial statement or any lower percentage as stated in the charter of the credit institution.

7. To approve decisions on investment in or purchase and sale of the credit institution’s fixed assets, with the projected investment amount, purchase price or historical price in case of sale of fixed assets accounting for 10% or more of the credit institution’s charter capital indicated in the audited latest financial statement or any lower percentage as stated in the charter of the credit institution, except investment amounts and transactions of purchase and sale of fixed assets falling within the competence of the General Meeting of Shareholders.

8. To decide on credit extension under Clause 7, Article 136 of this Law, except contracts and other transactions falling within the competence of the General Meeting of Shareholders.

9. To approve contracts and other transactions with their value accounting for under 20% of the credit institution’s charter capital indicated in the audited latest financial statement or any lower percentage as stated in the charter of the credit institution, between the credit institution and members of the Board of Directors, members of the Supervisory Board, the Chief Executive Officer, or major shareholders of the credit institution; related persons of managers, members of the Supervisory Board and major shareholders of the credit institution; or subsidiaries and affiliated companies of the credit institution.

10. To approve contracts and other transactions with their value accounting for 10% or more of the charter capital of the credit institution as indicated in the audited latest financial statement or any lower percentage as stated in the charter of the credit institution.

11. To examine, supervise and direct the Chief Executive Officer in performing his/her assigned tasks; to annually evaluate the performance of the Chief Executive Officer.

12. To issue internal regulations on organization, governance and operation of the credit institution in accordance with this Law and other relevant laws, except matters falling within the competence of the General Meeting of Shareholders.

13. To decide on risk management policies and supervise the implementation of risk prevention measures by the credit institution.

14. To consider and approve annual reports.

15. To decide to offer new shares within the limit of shares eligible for offering.

16. To decide on offer prices of shares and convertible bonds of the credit institution.

17. To decide on the redemption of shares of the credit institution under approved plans.

18. To propose plans on distribution of profits and dividends to be paid; to decide on the time limit and procedures for payment of dividends or handling of losses in the course of business operation.

19. To prepare relevant contents and documents for submission to the General Meeting of Shareholders for decision and approval, for matters falling within the competence of the General Meeting of Shareholders, except those falling within the ambit of the Supervisory Board’s tasks and powers.

20. To approve operation programs and plans of the Board of Directors, and programs, contents and documents for meetings of the General Meeting of Shareholders; to convene meetings of the General Meeting of Shareholders or send written requests for collecting opinions of shareholders in order to adopt resolutions or decisions of the General Meeting of Shareholders.

21. To organize, examine and supervise the implementation of resolutions or decisions of the General Meeting of Shareholders and Board of Directors.

22. To promptly notify the State Bank of information adversely affecting the status of members of the Board of Directors or Supervisory Board or the Chief Executive Officer.

23. To perform other tasks and exercise other powers provided by law and in the charter of the credit institution.

Article 71. Rights and obligations of the Chairperson of the Board of Directors of a credit institution being a joint-stock company

1. To formulate operation programs and plans of the Board of Directors; to take responsibility for the exercise of his/her rights and performance of his/her obligations.

2. To convene and chair meetings of the Board of Directors.

3. To sign, on the behalf of the Board of Directors, documents falling within the latter’s competence.

4. To organize the adoption of resolutions and decisions of the Board of Directors.

5. To supervise, or organize the supervision of, the implementation of resolutions and decisions of the Board of Directors.

6. To chair meetings of the General Meeting of Shareholders.

7. To ensure that all members of the Board of Directors receive adequate, objective and accurate information and have sufficient time for discussing matters subject to consideration by the Board of Directors.

8. To assign specific tasks to each member of the Board of Directors.

9. To supervise members of the Board of Directors in exercising their rights and performing their obligations and assigned tasks.

10. To authorize another member of the Board of Directors to exercise his/her rights and perform his/her obligations only when he/she is absent or unable to perform his/her tasks.

11. To annually evaluate the performance of each member and committees of the Board of Directors and report evaluation results to the General Meeting of Shareholders.

12. To exercise other rights and perform other obligations as provided by law and in the charter of the credit institution.

Article 72. Rights and obligations of members of the Board of Directors of a credit institution being a joint-stock company

1. To exercise their rights and perform their obligations in accordance with internal regulations of the Board of Directors and as assigned by the Chairperson of the Board of Directors in an honest and prudent manner and in the interests of the credit institution and shareholders; to promote the independence of independent members of the Board of Directors in exercising their rights and performing their obligations; to take responsibility for exercising their rights and performing their obligations.

2. To examine financial statement audit reports prepared by independent auditors, give opinions on or request executive officers of the credit institution, independent auditors and internal auditors to explain and clarify matters related to such reports.

3. To propose the Chairperson of the Board of Directors to convene extraordinary meetings of the Board of Directors.

4. To attend meetings of the Board of Directors, discuss and vote on matters falling within the ambit of tasks and powers of the Board of Directors in accordance with this Law; to take responsibility before the General Meeting of Shareholders and Board of Directors for their decisions.

In case any matter subject to voting involves a conflict of interests with certain members of the Board of Directors, these members may not vote on such matter.

5. To refrain from authorizing others to attend meetings of the Board of Directors in order to decide on the matters specified in Clauses 2, 4, 6, 7, 8, 9, 10, 12, 13, 14 and 18, Article 70 of this Law.

6. To implement resolutions and decisions of the General Meeting of Shareholders and Board of Directors.

7. To give explanations about the performance of their assigned tasks before the General Meeting of Shareholders and Board of Directors when so requested.

8. To perform other rights and perform other obligations as provided by law and in the charter of the credit institution.

Section 4

CREDIT INSTITUTIONS BEING SINGLE-MEMBER LIMITED LIABILITY COMPANIES

Article 73. Rights and obligations of the owner of a credit institution being a single-member limited liability company

1. The owner has the following rights:

a/ To decide on the number of members of the Members’ Council and record it in the charter of the credit institution, which, however, must be between 5 and 9;

b/ To appoint authorized representatives with a term of office not exceeding 5 years to exercise the rights and perform the obligations of the owner in accordance with this Law. The authorized representatives must fully meet the criteria and conditions specified in Clause 1, Article 41 of this Law;

c/ To appoint with a term of office not exceeding 5 years, relieve from duty and remove from office the Chairperson and other members of the Members’ Council; the Head and other members of the Supervisory Board; and the Chief Executive Officer, Chief Operations Officers and Chief Accountant;

d/ To decide on change of the charter capital of the credit institution; to transfer part or the whole of the charter capital of the credit institution and transform the legal form of the credit institution;

dd/ To decide on the establishment and redemption of, contribution of capital to, increase or decrease in capital contributions, and transfer of investment capital at, subsidiaries and affiliated companies;

e/ To approve annual financial statements; to decide on the use of profits after fulfilling tax obligations and other financial obligations of the credit institution;

g/ To decide on reorganization and dissolution of, and request courts to open bankruptcy proceedings for, the credit institution;

h/ To decide on remuneration, salary, bonus and other benefits of the Chairperson and other members of the Members’ Council, the Head and other members of the Supervisory Board, and the Chief Executive Officer.

2. The owner has the following obligations:

a/ To contribute capital in full and on time as committed;

b/ To comply with the charter of the credit institution;

c/ To identify and separate the owner’s assets from the credit institution’s assets;

d/ To comply with law in the purchase, sale, borrowing, lending, lease or rent and in other contracts and transactions between the credit institution and the owner;

dd/ To perform other obligations in accordance with this Law and the charter of the credit institution.

Article 74. Tasks and powers of the Members’ Council of a credit institution being a single-member limited liability company

1. The Members’ Council of a credit institution being a single-member limited liability company shall be composed of all authorized representatives of the owner; on behalf of the owner, organize the exercise of the rights and performance of the obligations of the owner; on behalf of the credit institution, exercise the rights and perform the obligations of the credit institution; and be held responsible before the owner for performance of its tasks and exercise of its powers in accordance with this Law and the charter of the credit institution.

2. The Members’ Council has the following tasks and powers:

a/ To issue, modify and supplement the charter of the credit institution;

b/ To issue development strategies and annual business plans of the credit institution;

c/ To submit to the owner of the credit institution for approval or decision issues subject to the owner’s approval or decision as specified at Points c, d, dd, e and g, Clause 1, Article 73 of this Law;

d/ To review and approve annual reports;

dd/ To decide to select independent audit firms according to Article 59 of this Law;

e/ To inspect, supervise and direct the Chief Executive Officer in performing his/her assigned tasks; to annually evaluate the performance of the Chief Executive Officer;

g/ To decide on the handling of losses arising during business operations;

h/ To decide to extend credits according to Clause 7, Article 136 of this Law;

i/ To approve plans on the credit institution’s contribution of capital to, and purchase and sale of shares or capital contributions of, enterprises and other credit institutions when the capital contribution, expected purchase price or book value in case of selling shares or capital contributions is valued at 20% or more of the credit institution’s charter capital stated in the credit institution’s latest audited financial statement or another lower percentage specified in the charter of the credit institution;

k/ To approve decisions on investment in, and purchase and sale of, fixed assets of the credit institution in case the investment level, expected purchase price or historical cost in case of sale of fixed assets is valued at 20% or more of the credit institution’s charter capital stated in the latest audited financial statement or another lower percentage specified in the charter of the credit institution;

l/ To approve contracts and other transactions of the credit institution with its subsidiaries and affiliated companies; contracts and other transactions of the credit institution with the Chairperson and other members of the Members’ Council, the Head and other members of the Supervisory Board, the Chief Executive Officer, and their related persons. In this case, the related members do not have voting rights, except contracts and other transactions with the owner of the credit institution;

m/ To decide on solutions for market development, marketing and technology transfer;

n/ To issue internal regulations related to the organization, administration and operation of the credit institution in accordance with this Law and other relevant laws;

o/ To organize supervision and evaluation of business activities of the credit institution;

p/ Other tasks and powers in accordance with law and the charter of the credit institution.

Article 75. Rights and obligations of the Chairperson of the Members’ Council of a credit institution being a single-member limited liability company

1. To formulate operational programs and plans of the Members’ Council; to be held responsible for the exercise of his/her rights and performance of his/her obligations.

2. To convene and chair meetings of the Members’ Council, and organize the collection of opinions of members of the Members’ Council.

3. To supervise, or organize supervision of, the implementation of resolutions and decisions of the Members’ Council.

4. To sign resolutions and decisions of the Members’ Council on behalf of the Members’ Council.

5. To ensure that members of the Members’ Council receive complete, objective, accurate information and have enough time to discuss issues subject to consideration by the Members’ Council.

6. To assign specific tasks to each member of the Members’ Council.

7. To supervise the exercise of rights and performance of obligations and tasks by members of the Members’ Council.

8. To authorize another member of the Members’ Council to exercise the rights and perform the obligations of Chairperson of the Members’ Council only when he/she is absent or unable to perform duties.

9. Annually, to evaluate the performance of each member of the Members’ Council and report evaluation results to the owner.

10. Other rights and obligations in accordance with law and the charter of the credit institution.

Article 76. Rights and obligations of members of the Members’ Council of a credit institution being a single-member limited liability company

1. To exercise the rights and perform the obligations of members of the Members’ Council according to the internal regulations of the Members’ Council and assignment of the Chairperson of the Members’ Council in an honest and prudent manner for the interests of the credit institution and the owner; to be held responsible for the exercise of their rights and performance of their obligations.

2. To review financial statement audit reports prepared by independent auditors, give opinions about, or request executive officers of the credit institution, independent auditors and internal auditors to explain and clarify, issues related to these reports.

3. To request the Chairperson of the Members’ Council to convene extraordinary meetings of the Members’ Council.

4. To attend meetings of the Members’ Council, discuss and vote on issues falling within the ambit of the tasks and powers of the Members’ Council in accordance with this Law, and be held responsible before the owner and the Members’ Council for their decisions.

In case a member of the Members’ Council has a conflict of interest concerning an issue put for voting, he/she may not vote on such issue.

5. To implement decisions of the owner and resolutions and decisions of the Members’ Council.

6. To explain to the owner and the Members’ Council on the performance of their assigned tasks when requested.

7. Other rights and obligations in accordance with law and the charter of the credit institution.

Section 5

CREDIT INSTITUTION BEING A LIMITED LIABILITY COMPANY WITH TWO OR MORE MEMBERS

Article 77. Rights and obligations of capital contributors

1. Capital contributors of a credit institution being a limited liability company with two or more members must be legal entities. The total number of capital contributors may not exceed 5. The maximum capital holding ratio of a member or a member and its related persons must not exceed 50% of the credit institution’s charter capital.

The capital contribution and capital holding ratio of domestic and foreign organizations at microfinance institutions must comply with regulations of the State Bank Governor.

2. Capital contributors have the following rights:

a/ To appoint their representatives to act as members of the Members’ Council and members of the Supervisory Board on the basis of their capital contributions in the credit institution or as agreed between capital contributor, and relieve from duty and remove from office these representatives;

b/ To be provided with information and reports on the operation of the Members’ Council and Supervisory Board, accounting books, annual financial statements and other documents and data of the credit institution;

c/ To be distributed with profits in proportion to their capital contributions after the credit institution fulfils tax obligations and other financial obligations;

d/ To be distributed with remaining assets of the credit institution in proportion to their capital contributions when the credit institution is dissolved or goes bankrupt;

dd/ To initiate a lawsuit against members of the Members’ Council, members of the Supervisory Board and the Chief Executive Officer in case these persons fail to comply or fully or promptly comply with law and the charter of the credit institution or resolutions or decisions of the Members’ Council with regard to their rights and obligations and in other cases prescribed by law and the charter of the credit institution.

3. Capital contributors have the following obligations:

a/ To refrain from withdrawing their contributed capital amounts in any form;

b/ To abide by the charter of the credit institution;

c/ Other obligations as prescribed by law and the charter of the credit institution.

Article 78. Transfer of capital contributions

1. Capital contributors may transfer their capital contributions and be given priority to additionally contribute capital when the credit institution increases its charter capital.

2. The State Bank Governor shall prescribe conditions for acquisition of capital contributions at credit institutions.

Article 79. Members’ Council of a credit institution being a limited liability company with two or more members

1. The term of office of the Members’ Council shall be specified in the charter of the credit institution and must not exceed 5 years. The term of office of members of the Members’ Council must coincide with the term of office of the Members’ Council. The term of office of members of the Members’ Council who are appointed as additional or substitute members shall be the remaining period of the term of office of the Members’ Council. When their term of office expires, the Members’ Council shall continue operating until the Members’ Council of the new term of office takes over the work.

2. The Members’ Council has the following tasks and powers:

a/ The tasks and powers specified at Points a, d, dd, e, h, i, k, m and n, Clause 2, Article 74 of this Law;

b/ To decide on the increase or decrease of charter capital, and decide on time and method of capital mobilization;

c/ To approve contracts and other transactions of the credit institution with its subsidiaries and affiliated companies; contracts and other transactions of the credit institution with members of the Members’ Council, members of the Supervisory Board, Chief Executive Officer, and their related persons. In this case, the related members of the Members’ Council do not have voting rights;

d/ To report on the financial situation and business results of the credit institution, and the performance of tasks and exercise of powers by the Members’ Council and its members at the request of capital contributors or competent state agencies;

dd/ To decide on redemption of capital contributions in accordance with this Law;

e/ To elect, relieve from duty and remove from office the Chairperson of the Members’ Council; to appoint, relieve from duty, remove from office, and sign and terminate contracts with, the Chief Executive Officer, Chief Operations Officers, Chief Accountant and other managers and executive officers according to their competence as prescribed by the internal regulations of the Members’ Council;

g/ To decide on remuneration, salary, bonus and other benefits of the Chairperson and other members of the Members’ Council, the Head and other members of the Supervisory Board, and Chief Executive Officer;

h/ To approve the credit institution’s annual financial statements and plans on use and distribution of profits or loss handling plans;

i/ To decide on the establishment of subsidiaries, branches and representative offices; to contribute capital to establish affiliated companies;

k/ To decide on the reorganization and dissolution of, request the court to open bankruptcy proceedings for, the credit institution;

l/ To issue development strategies and annual business plans of the credit institution;

m/ Other tasks and powers in accordance with law and the charter of the credit institution.

3. The Chairperson of the Members’ Council has the following rights and obligations:

a/ The rights and obligations specified in Clauses 1, 2, 3, 4, 5, 6, 7 and 8, Article 75 of this Law;

b/ Annually, to evaluate the performance of each member and Committees of the Members’ Council;

c/ Other rights and obligations in accordance with law and the charter of the credit institution.

4. Members of the Members’ Council have the following rights and obligations:

a/ The rights and obligations specified in Clauses 1, 2 and 3, Article 76 of this Law;

b/ To attend meetings of the Members’ Council, discuss and vote on issues falling within the ambit of tasks and powers of the Members’ Council in accordance with this Law, and be held responsible before the Members’ Council for their decisions.

In case a member of the Members’ Council has a conflict of interest with regard to an issue put for voting, he/she may not vote on such issue;

c/ To implement resolutions and decisions of the Members’ Council;

dd/ To give explanations to capital contributors and the Members’ Council on the performance of their assigned tasks when requested;

d/ Other rights and obligations in accordance with law and the charter of the credit institution.

Section 6

CREDIT INSTITUTIONS BEING COOPERATIVES

Article 80. Nature and objectives of operation

Credit institution being a cooperative is a type of credit institution organized after the model of cooperative and operating in the banking sector with the main objective of providing mutual support among members in order to help them effectively carry out production, business and service activities and improve their lives. Credit institutions being cooperatives include cooperative banks and people’s credit funds.

Article 81. Members of credit institutions being cooperatives

1. Members of a cooperative bank include all people’s credit funds and other capital-contributing legal entities.

2. Members of a people’s credit fund include all capital-contributing individuals, households and legal entities.

Article 82. Organizational and managerial structure of credit institutions being cooperatives

1. The organizational and managerial structure of a cooperative bank or people’s credit fund shall be composed of the General Meeting of Members, Board of Directors, Supervisory Board, and Chief Executive Officer.

2. Cooperative banks and people’s credit funds must have internal auditors and internal control systems and carry out independent audit according to regulations of the State Bank Governor.

Article 83. Charter capital

1. The charter capital of a cooperative bank includes:

a/ Capital contributed by members;

b/ Capital allocated by the State in support of the bank.

2. The charter capital of a people’s credit fund includes capital contributed by members.

3. The charter capital of a cooperative bank or people’s credit funds shall be supplemented from the following sources:

a/ Capital contributed by members;

b/ Capital allocated by the State in support of the bank, for cooperative banks;

c/ The reserve fund for supplementation of the charter capital and other funds as prescribed by law;

d/ Other lawful capital sources.

4. The capital contribution level of a member shall be decided by the General Meeting of Members according to regulations of the State Bank Governor.

Article 84. Rights of members

1. To attend the General Meeting of Members or elect delegates to attend the General Meeting of Members and vote on issues falling within the competence of the General Meeting of Members.

2. To stand for, and nominate others to, the Board of Directors, Supervisory Board and other elected titles according to the charter of the cooperative bank or people’s credit fund.

3. To deposit money; to borrow loans; to be distributed with profits based on the degree of their use of services and the proportion of their capital contributions.

4. To enjoy benefits provided by the cooperative bank or people’s credit fund.

5. To be provided with necessary information related to the operation of the cooperative bank or people’s credit fund; to receive support in terms of training, further training and improvement of professional qualifications.

6. To recommend and request the Board of Directors, Chief Executive Officer and Supervisory Board to give explanations about their operations.

7. To request the Board of Directors and Supervisory Board to convene extraordinary meetings of the General Meeting of Members.

8. To transfer their capital contributions, rights and obligations to others according to regulations of the State Bank Governor.

9. To have part or the whole of their capital contributions returned according to regulations of the State Bank Governor.

10. To leave the people’s credit fund according to the charter of the people’s credit fund; members who are other capital-contributing legal entities shall leave the cooperative bank according to the charter of the cooperative bank.

11. Other rights as prescribed by law and the charter of the cooperative bank or people’s credit fund.

Article 85. Obligations of members

1. To abide by the principles, objectives, charter and regulations of the cooperative bank or people’s credit fund, and resolutions and decisions of the General Meeting of Members and Board of Directors.

2. To contribute capital in full and on time as committed according to the charter of the cooperative bank or people’s credit fund and other relevant laws.

3. To cooperate with and support other members, contributing to building, and promoting the development of, the cooperative bank or people’s credit fund.

4. To be held responsible for debts and financial obligations of the cooperative bank or people’s credit fund within the scope of their capital contributions in the cooperative bank or people’s credit fund.

5. To repay the principal and interest of loans borrowed from the cooperative bank or people’s credit fund as committed.

6. To compensate for the damage they cause to the cooperative bank or people’s credit fund in accordance with law and the charter of the cooperative bank or people’s credit fund.

7. To be held responsible when acting in the name of the cooperative bank or people’s credit fund in any form to commit violations of law or conduct business or other transactions for personal gain or for the interests of other organizations and individuals.

8. Other obligations in accordance with law and the charter of the cooperative bank or people’s credit fund.

Article 86. General Meeting of Members

1. The General Meeting of Members is the highest decision-making body of a cooperative bank or people’s credit fund.

2. The General Meeting of Members shall be held in the form of a plenary meeting or a meeting of delegates. In case of organizing a meeting of delegates, the number of delegates shall be specified by the charter of the cooperative bank or people’s credit fund under regulations but must not be smaller than 100.

3. The General Meeting of Members has the following tasks and powers:

a/ To approve development orientations of the cooperative bank or people’s credit fund;

b/ To approve, modify and supplement the charter of the cooperative bank or people’s credit fund;

c/ To approve regulations on organization and operation of the Board of Directors and Supervisory Board of the cooperative bank or people’s credit fund;

d/ To approve the Board of Directors’ and Supervisory Board’s reports on the performance of their tasks and powers;

dd/ To approve annual financial statements; and plans on distribution of profits after fulfilling tax obligations and other financial obligations and handling losses;

e/ To approve annual business plans and membership development plans; and capital contribution levels of members;

g/ To approve plans on change of the charter capital, except case of change of the charter capital due to change in capital contribution of members;

h/ To approve the number of members of the Board of Directors and Supervisory Board of each term of office; to elect, relieve from duty, and remove from office the Chairperson and other members of the Board of Directors, and the Head and other members of the Supervisory Board; to approve the policy of appointing a member of the Board of Directors to concurrently act as Chief Executive Officer or hiring a Chief Executive Offer, for people’s credit funds;

i/ To approve the investment in, and purchase and sale of, fixed assets of the cooperative bank or people’s credit fund when the investment level or expected purchase price or historical cost in case of sale of fixed assets is valued at 20% or more of the charter capital of the cooperative bank or people’s credit fund as stated in the latest audited financial statement or latest financial statement, for people’s credit funds that are not required to have their financial statements audited, or a lower percentage specified in the charter of the cooperative bank or people’s credit fund;

k/ To decide on solutions for redressing major financial fluctuations of the cooperative bank or people’s credit funds;

l/ To decide on remuneration, bonus and other benefits of the Chairperson and other members of the Board of Directors, and the Head and other members of the Supervisory Board;

m/ To consider and handle according to its competence violations committed by the Board of Directors and Supervisory Board that cause damage to the cooperative bank or people’s credit fund and members;

n/ To decide on the organizational and managerial structure of the cooperative bank or people’s credit fund;

o/ To decide to expel members that are other capital-contributing legal entities of the cooperative bank or members of the people’s credit fund;

p/ To divide, split, consolidate, merger, or voluntarily dissolve the cooperative bank or people’s credit fund;

q/ To decide on the selection of independent audit firms according to Clause 2, Article 82 of this Law;

r/ Other issues proposed by the Board of Directors, Supervisory Board or at least one-third of total members;

s/ Other tasks and powers in accordance with law and the charter of the cooperative bank or people’s credit fund.

Article 87. Board of Directors of a credit institution being a cooperative

1. The Board of Directors is the governing body of a cooperative bank or people’s credit fund, composed of a Chairperson and other members.

2. The number of members of the Board of Directors for each term of office shall be decided by the General Meeting of Members and must be between 3 and 9. In case the number of members of the Board of Directors falls below the required minimum number, within 90 days after such event occurs, the cooperative bank or people’s credit fund shall elect additional members to the Board of Directors in order to ensure that the number of members reaches the required minimum number, except the case specified in Clause 5, Article 166 of this Law.

3. The term of office of the Board of Directors shall be decided by the General Meeting of Members and stated in the charter but must not exceed 5 years. The term of office of members of the Board of Directors who are additional or substitute members is the remaining period of the term of office of the Board of Directors. When the term of office of the Board of Directors expires, the Board of Directors shall continue operating until the Board of Directors of the new term of office takes over the work.

The number of terms of office of the Chairperson of the Board of Directors of a people’s credit fund shall be prescribed by the State Bank Governor.

4. Members of the Board of Directors must be individual members or representatives of capital contributions of members being legal entities.

5. The Board of Directors of a cooperative bank has an assisting division. The functions and tasks of the assisting division shall be prescribed by the Board of Directors.

6. The Chairperson or other members of the Board of Directors may not authorize a person who is not a member of the Board of Directors to exercise the rights and perform the obligations of the Chairperson or other members of the Board of Directors.

7. The Board of Directors shall use the seal of the cooperative bank or people’s credit fund to perform its tasks and exercise its powers.

Article 88. Tasks and powers of the Board of Directors of a credit institution being a cooperative

1. To submit to the General Meeting of Members for consideration and approval contents falling within the competence of the General Meeting of Members.

2. To organize the implementation of resolutions and decisions of the General Meeting of Members. To report to the General Meeting of Members on results of business operations of the cooperative bank or people’s credit fund. To be held responsible before the General Meeting of Members for the performance of its tasks and exercise of its powers in accordance with this Law and the charter of the cooperative bank or people’s credit fund.

3. To decide on the establishment of branches, representative offices and non-business units of the credit institution being a cooperative.

4. To approve the investment in, and purchase and sale of, fixed assets of the cooperative bank or people’s credit funds when the investment level, expected purchase price or historical cost in case of selling fixed assets is valued at between 10% and below 20% of the charter capital of the cooperative bank or people’s credit fund as stated in the latest audited financial statement or the latest financial statement, for people’s credit funds that are not required to have their financial statements audited, or a lower percentage specified by the charter of the cooperative bank or people’s credit fund.

5. To approve contracts and other transactions of the cooperative bank or people’s credit fund with members of the Board of Directors, members of the Supervisory Board, Chief Executive Officer, and their related persons. In this case, the related members of the Board of Directors do not have voting rights.

6. To appoint, relieve from duty, discipline, terminate the work, and decide on salary, bonus and other benefits of the Chief Executive Officer, Chief Operations Officers and other executive officers under its management according to the internal regulations of the Board of Directors and law.

7. To prepare the agenda of the General Meeting of Members and convene the General Meeting of Members.

8. To admit new members to, and resolve applications of other capital-contributing legal entities for leaving, the cooperative bank , and resolve members’ applications for leaving the people’s credit fund, and report thereon to the General Meeting of Members at the nearest meeting of the General Meeting of Members.

9. To inspect, supervise and direct the Chief Executive Officer in performing his/her assigned tasks; annually, to evaluate the performance of the Chief Executive Officer.

10. To issue internal regulations related to the organization, administration and operation of the cooperative bank or people’s credit fund in accordance with this Law and other relevant laws, except issues falling within the competence of the General Meeting of Members.

11. To supervise the implementation of risk prevention measures of the cooperative bank or people’s credit fund.

12. Other tasks and powers in accordance with law and the charter of the cooperative bank or people’s credit fund.

Article 89. Rights and obligations of the Chairperson of the Board of Directors of a credit institution being a cooperative

1. To formulate operational programs and plans of the Board of Directors; to be held responsible for the exercise of his/her rights and performance of his/her obligations.

2. To convene and chair meetings of the Board of Directors.

3. To chair meetings of the General Meeting of Members.

4. To assign specific tasks to each member of the Board of Directors.

5. To supervise members of the Board of Directors in implementing their assigned rights, obligations and tasks.

6. To ensure that members of the Board of Directors receive complete, objective and accurate information and have enough time to discuss issues subject to consideration by the Board of Directors.

7. To be held responsible before the Board of Directors and the General Meeting of Members for performance of his/her assigned tasks.

8. To sign resolutions and decisions of the Board of Directors on behalf of the Board of Directors.

9. To authorize another member of the Board of Directors to exercise the rights and perform the obligations of the Chairperson of the Board of Directors only when he/she is absent or unable to perform duties.

10. Other rights and obligations in accordance with law and the charter of the cooperative bank or people’s credit fund.

Article 90. Rights and obligations of members of the Board of Directors of a credit institution being a cooperative

1. To exercise the rights and perform the obligations of members of the Board of Directors according to the internal regulations of the Board of Directors and the assignment of the Chairperson of the Board of Directors in an honest and prudent manner for the interests of the cooperative bank or people’s credit fund and its members; to take responsibility for the exercise of their rights and performance of their obligations.

2. To review financial statements and financial statement audit reports; to give their opinion on, or request executive officers of the cooperative bank or people’s credit fund, independent auditors and internal auditors to explain and clarify, issues related to these reports.

3. To request the Chairperson of the Board of Directors to convene extraordinary meetings of the Board of Directors.

4. To attend meetings of the Board of Directors, discuss and vote on issues falling within the ambit of tasks and powers of the Board of Directors, and be held responsible before the General Meeting of Members and Board of Directors for their decisions.

In case a member of the Board of Directors has a conflict of interest with regard to an issue put for voting, he/she may not vote on such issue.

5. To implement resolutions and decisions of the General Meeting of Members and Board of Directors.

6. To give explanations about the performance of their assigned tasks to the General Meeting of Members and Board of Directors when requested.

7. Other rights and obligations in accordance with law and the charter of the cooperative bank or people’s credit fund.

Article 91. Supervisory Board of a credit institution being a cooperative

1. The Supervisory Board of a cooperative bank must have at least 3 members. The number of members of the Supervisory Board of a people’s credit fund must be consistent with the scale of its operation and comply with the regulations of the State Bank Governor.

2. The Supervisory Board has an internal audit division and an assisting division to help it perform its tasks.

3. Members of the Supervisory Board of a cooperative bank must be representatives of capital contributions of members being people’s credit funds and individuals nominated by members being other capital-contributing legal entities. Members of the Supervisory Board of a people’s credit fund must be individual members or representatives of the capital contributions of members being legal entities of the people’s credit fund. In case the number of members of the Supervisory Board falls below the required minimum number specified in Clause 1 of this Article, within 90 days from the date such event occurs, the cooperative bank or people’s credit fund shall organize additional election to ensure that the number of members of the Supervisory Board reaches the required minimum number, except the case specified in Clause 5, Article 166 of this Law.

4. The term of office of the Supervisory Board must coincide with the term of office the Board of Directors. The term of office of members of the Supervisory Board must coincide with the term of office of the Supervisory Board. The term of office of additional and substitute members shall be the remaining period of the term of office of the Supervisory Board. When its term of office expires, the Supervisory Board shall continue operating until the Supervisory Board of the new term of office takes over the work.

The number of terms of office of the Head of the Supervisory Board of a people’s credit fund shall be prescribed by the State Bank Governor.

Article 92. Tasks and powers of the Supervisory Board of a credit institution being a cooperative

1. To supervise the management and operation of the cooperative bank or people’s credit fund regarding the compliance with law, the charter of the cooperative bank or people’s credit fund, and resolutions and decisions of the General Meeting of Members and Board of Directors; to be held responsible before the General Meeting of Members for the performance of their assigned tasks and exercise of their powers in accordance with this Law and the charter of the cooperative bank or people’s credit fund.

2. To issue internal regulations of the Supervisory Board; annually, to review internal regulations of the Supervisory Board and internal regulations on accounting and reporting of the cooperative bank or people’s credit fund.

3. To appraise annual financial statements of the cooperative bank or people’s credit fund; to report to the General Meeting of Members on results of appraisal of financial statements and evaluation of the reasonability, legality, honesty and degree of prudence in accounting, statistics and formulation of financial statements. The Supervisory Board may consult the Board of Directors before submitting reports and recommendations to the General Meeting of Members.

4. To examine financial activities, and supervise the observance of the regimes of accounting, distribution of profits, handling of losses, and use of funds, assets and supports from the State; to supervise safety in operation of the cooperative bank or people’s credit fund.

5. To perform the internal audit function; to access, and be provided with, complete and accurate information and documents related to the management and operation of the cooperative bank or people’s credit fund in a timely manner, and have the right to use resources of the cooperative bank or people’s credit fund to perform their assigned tasks and powers; to outsource their tasks to external experts, independent consultants and organizations but shall still be responsible for the performance of their tasks.

6. To promptly notify the Board of Directors when detecting that managers or executive officers of the cooperative bank or people’s credit fund commit violations of law or the charter or internal regulations of the cooperative bank or people’s credit fund; to request the violators to immediately stop the violations and seek solutions for remedying consequences (if any).

7. To convene extraordinary meetings of the General Meeting of Members in accordance with law.

8. To notify the Board of Directors, and report to the General Meeting of Members and the State Bank on results of supervisory activities; to make recommendations to the Board of Directors and the Chief Executive Officer to overcome weaknesses and violations in operation of the cooperative bank or people’s credit fund.

9. To appoint, relieve from duty, discipline, suspend and decide on salary and other benefits for holders of titles in the internal audit division.

10. To receive recommendations related to the cooperative bank or people’s credit fund; to resolve these recommendations according to their competence or propose the Board of Directors or the General Meeting of Members to settle them according to competence.

11. The Head of the Supervisory Board may attend, but does not have the right to vote at, meetings of the Board of Directors; to request the recording of their opinions in the minutes of meetings of the Board of Directors if such opinions differ from resolutions and decisions of the Board of Directors and report thereon to the General Meeting of Members.

12. Other tasks and powers as prescribed by law and the charter of the cooperative bank or people’s credit fund.

Article 93. Rights and obligations of the Head of the Supervisory Board of a credit institution being a cooperative

1. To organize the implementation of tasks and powers of the Supervisory Board according to Article 92 of this Law; to be held responsible for the exercise of his/her rights and performance of his/her obligations.

2. To convene and chair meetings of the Supervisory Board.

3. To sign documents within the competence of the Supervisory Board on behalf of the Supervisory Board.

4. To prepare working plans of the Supervisory Board and assign specific tasks to each member of the Supervisory Board.

5. To ensure that members of the Supervisory Board receive complete, objective and accurate information and have enough time to discuss issues subject to consideration by the Supervisory Board.

6. To supervise and direct the implementation of assigned tasks as well as the exercise of rights and performance of obligations by members of the Supervisory Board.

7. To authorize another member of the Supervisory Board to exercise the rights and perform the obligations of the Head of the Supervisory Board only when he/she is absent or unable to perform duties.

8. Other rights and obligations as prescribed by law and the charter of the cooperative bank or people’s credit fund.

Article 94. Rights and obligations of members of the Supervisory Board of a credit institution being a cooperative

1. To abide by law, the charter of the cooperative bank or people’s credit fund and internal regulations of the Supervisory Board in an honest and prudent manner for the interests of the cooperative bank or people’s credit fund and its members; to be held responsible for the exercise of their rights and performance of their obligations.

2. To request the Head of the Supervisory Board to convene extraordinary meetings of the Supervisory Board.

3. To control business activities, accounting books, assets and financial statements and recommend remedial measures.

4. To request managers, executive officers and employees of the cooperative bank or people’s credit fund to provide data and explanations about business activities so as to perform their assigned tasks.

5. To report to the Head of the Supervisory Board on abnormal financial activities and be held responsible for their evaluations and conclusions.

6. To attend meetings of the Supervisory Board, discuss and vote on issues falling within the ambit of tasks and powers of the Supervisory Board, except issues that involve conflicts with their interests.

7. Other rights and obligations as prescribed by law and the charter of the cooperative bank or people’s credit fund.

Article 95. Chief Executive Officer of a credit institution being a cooperative

1. The Board of Directors shall appoint the Chief Executive Officer of the cooperative bank or people’s credit funds with a term of office not exceeding 5 years.

2. The Chief Executive Officer is the highest executive officer who shall take charge of administering day-to-day work of the cooperative bank or people’s credit fund; be subject to the supervision by and held responsible before the Board of Directors and law for the performance of his/her tasks and exercise of his/her powers.

3. In case of vacancy of the Chief Executive Officer, the Board of Directors shall appoint a Chief Executive Officer within 90 days after the vacancy occurs.

Article 96. Rights and obligations of the Chief Executive Officer of a credit institution being a cooperative

1. To submit to the Board of Directors issues falling within the competence of the Board of Directors.

2. To organize the implementation of resolutions and decisions of the General Meeting of Members and Board of Directors.

3. To organize the implementation of business plans; to decide on issues related to day-to-day business activities of the cooperative bank or people’s credit fund according to his/her competence.

4. To establish, and maintain effective operation of, an internal control system.

5. To prepare and submit financial statements to the Board of Directors for approval or for reporting to a competent authority for approval; to be held responsible for the accuracy and truthfulness of financial statements, statistical reports, account-finalization data and other financial information.

6. To issue according to his/her competence internal rules and regulations; and operational processes and procedures to operate business operation systems and management information systems.

7. To report to the Board of Directors, Supervisory Board, General Meeting of Members and competent state agencies on operations and business results of the cooperative bank or people’s credit fund.

8. To decide to apply measures beyond his/her competence in case of disasters, enemy sabotage, fire or incident and take responsibility for such decision and promptly report thereon to the Board of Directors.

9. To request the Board of Directors to hold extraordinary meetings.

10. To appoint, relieve from duty and remove from office holders of executive titles in the cooperative bank or people’s credit funds, except titles falling within the competence of the General Meeting of Members or Board of Directors.

11. To sign contracts and other transactions on behalf of the cooperative bank or people’s credit fund according to the charter and internal regulations of the cooperative bank or people’s credit fund.

12. To propose plans on use of profits and handling of business losses of the cooperative bank or people’s credit fund.

13. To recruit employees; to decide on salary and bonus of employees according to his/her competence.

14. Other rights and obligations as prescribed by law and the charter of the cooperative bank or people’s credit fund.

Section 7

FOREIGN BANK BRANCHES

Article 97. Organizational and managerial structure of foreign bank branches

1. The organizational and managerial structure of a foreign bank branch shall be decided by the foreign bank and must comply with the provisions of this Law regarding administration, and the provisions of Articles 57 and 59 of this Law regarding the internal control system and independent audit; internal audit must comply with regulations of the foreign bank.

2. In case a foreign bank has two or more branches operating in Vietnam and implements the consolidated financial, accounting and reporting regime, it shall authorize the Chief Executive Officer of one of its branches to be held responsible before law for all activities of their branches in Vietnam.

Article 98. Chief Executive Officers of foreign bank branches

1. The Chief Executive Officer of a foreign bank branch is the person who represents the foreign bank branch before law, is held responsible for all activities of the foreign bank branch and administers day-to-day operations of the foreign bank branch within the ambit of his/her rights and obligations in accordance with this Law and other relevant laws; in case of absence from Vietnam, the Chief Executive Officer shall authorize in writing another person residing in Vietnam to exercise the rights and obligations of the Chief Executive Officer.

2. The Chief Executive Officer of a foreign bank branch may not concurrently act as head of a Vietnam-based representative office of the foreign bank, or as manager or executive officer of another credit institution or economic organization.

3. The Chief Executive Officer of a foreign bank branch must meet the criteria and conditions specified in Clause 4, Article 41 of this Law. The person expected to be appointed as Chief Executive Officer of a foreign bank branch shall be approved in writing by the State Bank before the appointment.

Dossiers and procedures for approval of personnel nominated to be appointed as Chief Executive Officer of a foreign bank branch and for notification of the appointed person must comply with Clauses 2 and 3, Article 44 of this Law.

Chapter V

OPERATIONS OF CREDIT INSTITUTIONS AND FOREIGN BANK BRANCHES

Section 1

GENERAL PROVISIONS ON OPERATIONS OF CREDIT INSTITUTIONS

Article 99. Scope of licensed operations of credit institutions

1. Contents of banking activities and other business operations of a credit institution shall be stated in the license granted to such credit institution.

2. Banking activities of credit institutions specified in this Law must comply with regulations of the State Bank Governor.

Article 100. Interests and charges in business operations of credit institutions

1. Credit institutions may fix and shall publicly post deposit interest rates and service charge rates applied in their business operations.

2. Credit institutions and their customers may agree on interest rates and credit extension charges to be applied to their banking activities in accordance with the Law on Credit Institutions.         

3. In case banking activities experience abnormal developments, in order to ensure safety for the system of credit institutions, the State Bank Governor shall provide a mechanism for determining interest rates and charges applicable to business operations of credit institutions.

Article 101. Internal regulations

1. In pursuance to this Law, regulations of the State Bank Governor and other relevant regulations, credit institutions shall formulate and issue internal regulations on their professional operations, including also performance of professional operations by electronic means, ensuring the availability of internal control, internal audit and risk management mechanisms applicable to each business operation process and plans to tackle cases of emergency.

2. Credit institutions shall promulgate internal regulations on the following:

a/ Credit extension and management thereof;

b/ Classification of assets, setting aside and use of risk provisions;

c/ Assessment of quality of assets and observance of the minimum capital adequacy ratio;

d/ Liquidity management, covering liquidity management procedures and limits;

dd/ Internal control and internal audit in conformity with the nature and scope of their operations;

e/ The internal credit rating system, for credit institutions that are required to build the internal credit rating system in accordance with the law on credit institutions;

g/ Risk management in their operations;

h/ Anti-money laundering;

i/ Plans to tackle cases of emergency.

3. Credit institutions shall send their internal regulations specified in Clause 2 of this Article to the State Bank within 10 days after the issuance thereof.

Article 102. Consideration and approval of credit extension, and inspection of use of loans and assets for finance leasing

1. Credit institutions shall request their customers to provide documents and data proving their financial capability, feasibility of their capital use plans and lawful capital use purposes before deciding on credit extension, except the case specified in Clause 2 of this Article.

2. Credit institutions shall obtain minimal information on lawful capital use purposes and financial capability of their customers before deciding on credit extension for the following small-value credit extensions:

a/ Loans for daily-life needs, credit extensions via cards granted by commercial banks or foreign bank branches;

b/ Financial leases, consumption loans and credit extensions via cards granted by non-bank credit institutions;

c/ Loans for daily-life needs from people’s credit funds;

d/ Loans from micro-finance institutions.

3. Customers shall provide information, documents and data specified in Clauses 1 and 2 of this Article and information about their related persons to credit institutions upon application for credit extension.

4. Credit institutions shall consider and approve credit extension on the principle of clearly separating the responsibility for credit appraisal and credit extension decision.

5. Credit institutions are entitled and obliged to inspect and supervise the use of loans and assets for financial leasing and payment of debts by their customers under Clause 1 of this Article; may request loan borrowers and financial lessees to report on the use of loans and assets for financial leasing, and provide documents and data to prove that such loans and assets for financial leasing are properly used.

6. Customers shall use loans and assets for financial leasing for proper purposes as committed, and make full and punctual payment of loan principals, interests and charges as agreed.

7. Credit institutions and their customers shall agree on application or non-application of security measures in credit extension.

8. The State Bank Governor shall specify small-value credit extension amounts, inspection and supervision of the use of loans and assets for financial leasing and payment of debts by customers specified in Clause 2 of this Article; the identification of customers that are required to provide information about related persons and information to be provided to credit institutions upon the application for credit extension, and consideration and approval of credit extensions by electronic means.

Article 103. Termination of credit extension, settlement of debts and interest rate exemption or reduction

1. Credit institutions may terminate credit extension and recover debts ahead of schedule when detecting that customers have provided untruthful information, breached credit extension contracts or agreements or security contracts.

2. Credit institutions may handle debts and collaterals under credit extension contracts or agreements, security contracts and law, unless otherwise agreed by involved parties. The rescheduling, sale and purchase of debts by credit institutions must comply with regulations of the State Bank Governor.

3. In case a credit institution’s customer or its/his/her securing party is unable to pay a debt due to bankruptcy, the credit institution shall recover the debt in accordance with the bankruptcy law.

4. Credit institutions may decide on interest rate and charge exemption or reduction for customers under their internal regulations.

Article 104. Retention of credit dossiers

1. Credit institutions shall retain credit dossiers, including:

a/ Documents and data of the application for credit extension;

b/ Documents and data for credit appraisal and extension decisions;

c/ Credit extension contracts or agreements; dossiers of security measures in case such measures are applied;

d/ Documents and data arising in the course of use of credit extensions relating to credit extension contracts or agreements.

2. The retention duration of credit dossiers must comply with the law on archives.

Article 105. E-transactions in operations of credit institutions

Credit institutions may carry out their operations by electronic means under regulations of the State Bank Governor and the law on e-transactions.

Article 106. Controlled regulatory sandbox in the banking sector

1. Controlled regulatory sandbox in the banking sector means an environment for experimenting the application of technologies and deploying new products, services and business models in the banking sector within a limited scope, space and period of time; institutions wishing to participate in the controlled regulatory sandbox must satisfy conditions and criteria for approval of participants and submit to supervision by competent state agencies.

2. The Government shall detail this Article.

Section 2

OPERATIONS OF COMMERCIAL BANKS

Article 107. Banking activities of commercial banks

1. Receiving demand deposits, term deposits, savings deposits and deposits of other types.

2. Issuing deposit certificates.

3. Extending credit by:

a/ Lending loans;

b/ Discounting and re-discounting;

c/ Providing bank guarantee;

d/ Issuing credit cards;

dd/ Domestic factoring; international factoring, for banks licensed for international payment;

e/ Letters of credit;

g/ Other forms of credit extension specified by the State Bank Governor.

4. Opening payment accounts for customers.

5. Providing payment instruments.

6. Providing the following via-account payment services:

a/ Domestic payment services, including check, payment order, authorized payment, collection, authorized collection, money transfer and bank card, and collection and payment services.

b/ Providing international payment services after obtaining the State Bank’s written approval and other payment services specified by the State Bank Governor.

Article 108. Borrowing of loans, making of deposits, purchase and sale of valuable papers by commercial banks

1. Commercial banks may borrow loans from the State Bank in the form of re-financing in accordance with the Law on the State Bank of Vietnam.

2. Commercial banks may purchase valuable papers from or sell valuable papers to the State Bank in accordance with the Law on the State Bank of Vietnam.

3. Commercial banks may lend or borrow loans, make deposits, receive deposits and forward trade in valuable papers with credit institutions and foreign bank branches in accordance with regulations of the State Bank Governor.

4. Commercial banks may borrow foreign loans in accordance with law.

Article 109. Opening of accounts of commercial banks

1. Commercial banks shall open payment accounts at the State Bank and maintain a compulsory reserve balance on such accounts.

2. Commercial banks may open payment accounts at credit institutions licensed to provide via-account payment services.

3. Commercial banks may open offshore payment accounts in accordance with the foreign exchange law.

Article 110. Organization of, and participation in, payment systems of commercial banks

1. Commercial banks may organize their own internal payment systems and participate in the national inter-bank payment system.

2. Commercial banks may participate in international payment systems when satisfying the conditions specified by the Government and obtaining the State Bank’s written approval.

3. The State Bank Governor shall specify dossiers and procedures for approving commercial banks’ participation in international payment systems.

Article 111. Capital contribution and share purchase by commercial banks

1. Commercial banks may only use their charter capital and reserve funds to contribute capital or purchase shares under Clauses 2, 3, 4 and 8 of this Article.

2. Commercial banks shall establish or acquire subsidiaries or affiliated companies for carrying out the following business operations:

a/ Securities underwriting and securities brokerage; management and distribution of securities investment fund certificates and management of securities investment portfolios and stock trading;

b/ Financial leasing;

c/ Insurance. 

3. Commercial banks may establish or acquire subsidiaries or affiliated companies operating in the areas of management of debts and use of assets, overseas remittances, gold, factoring, issuance of credit cards, consumer credit, intermediary payment services and credit information.

4. Commercial banks may contribute capital to, or purchase shares from, enterprises operating in the following areas:

a/ Insurance, securities, remittances, gold, factoring, issuance of credit cards, consumer credit, intermediary payment services and credit information;

b/ Other areas not specified at Point a of this Clause after obtaining the State Bank’s written approval.

5. Commercial banks may establish or acquire subsidiaries or affiliated companies under Clauses 2 and 3 of this Article after obtaining the State Bank’s written approval.

6. The State Bank shall specify conditions, dossiers and procedures for approving the establishment and acquisition of subsidiaries or affiliated companies and the capital contribution and share purchase by commercial banks; conditions for capital increase at subsidiaries and affiliated companies of commercial banks; operations of subsidiaries and affiliated companies of commercial banks in the field of management of debts and use of assets.

7. Commercial banks shall establish subsidiaries or affiliated companies in accordance with this Law and other relevant laws.

8. Commercial banks and their subsidiaries may acquire or hold shares of other credit institutions on the conditions and within the limits specified by the State Bank Governor.

Article 112. Foreign exchange trading and provision of foreign exchange services and derivative products by commercial banks

1. After obtaining the State Bank’s written approval, commercial banks may trade in and provide to domestic and overseas customers the following products and services:

a/ Foreign exchange;

b/ Interest rate, foreign exchange and currency derivatives and other financial products.

2. The State Bank Governor shall specify the scope of foreign exchange trading, provision of foreign exchange services, trading and supply of derivative products; conditions, dossiers and procedures for approving foreign exchange trading, provision of foreign exchange services, and the trading and supply of derivative products by commercial banks.

3. Commercial banks’ trading in foreign exchange and provision of foreign exchange services to their customers must comply with the foreign exchange law.

Article 113. Entrustment and agency and agency assignment operations of commercial banks

1. Commercial banks may entrust, undertake entrustment, act as agents in banking activities, and assign payment agents in accordance with regulations of the State Bank Governor.

2. Commercial banks may act as insurance agents in accordance with the insurance business law and within the scope of insurance agency under regulations of the State Bank Governor.

Article 114. Other business operations of commercial banks

1. Commercial banks may carry out other business operations in accordance with regulations of the State Bank Governor:

a/ Providing cash management services and treasury services to credit institutions and foreign bank branches; asset preservation and safe keeping services;

b/ Providing money transfer, collection and payment services and other payment services not via accounts;

c/ Purchasing and selling State Bank bills, corporate bonds and other valuable papers, except the purchase and sale of valuable papers specified at Point a, Clause 2 of this Article;

d/ Providing currency brokerage services;

dd/ Gold trading;

e/ Other services related to factoring and letters of credit;

g/ Providing consultancy on banking activities and other business activities under their licenses.

2. Commercial banks may carry out other business operations as specified below in accordance with relevant laws:

a/ Purchasing and selling Government debt instruments, Government-guaranteed bonds and municipal bonds;

b/ Issuing bonds;

c/ Securities depository;

d/ Supervising banking operation;

dd/ Acting as collateral management agencies for lenders being international financial institutions, foreign credit institutions, credit institutions and foreign bank branches.

3. Commercial banks may carry out other business operations relating to banking activities other than those specified in Clauses 1 and 2 of this Article in accordance with regulations of the State Bank Governor and other relevant regulations.

Section 3

OPERATIONS OF GENERAL FINANCE COMPANIES

Article 115. Banking activities of general finance companies

1. Receiving demand deposits and term deposits of organizations.

2. Issuing deposit certificates to raise capital from organizations.

3. Lending.

4. Providing bank guarantee.

5. Discounting and re-discounting.

6. Issuing credit cards, factoring, financial leasing.

7. Other forms of credit extension specified in regulations of the State Bank Governor.

Article 116. Borrowing of loans, making of deposits, purchase and sale of valuable papers by general finance companies

1. General finance companies may borrow loans from the State Bank in the form of re-financing in accordance with the Law on the State Bank of Vietnam.

2. General finance companies may purchase valuable papers from or sell valuable papers to the State Bank in accordance with the Law on the State Bank of Vietnam.

3. General finance companies may lend or borrow loans, make deposits, receive deposits, and carry out forward trading of valuable papers with credit institutions and foreign bank branches in accordance with regulations of the State Bank Governor.

4. General finance companies may borrow foreign loans in accordance with law.

Article 117. Opening of accounts of general finance companies

1. A general finance company receiving deposits shall open a payment account at the State Bank and must maintain a compulsory reserve balance on such account.

2. General finance companies may open payment accounts at commercial banks and foreign bank branches.

3. General finance companies licensed to issue credit cards may open accounts at foreign banks in accordance with the foreign exchange law.

4. General finance companies may open deposit accounts and loan management accounts for their customers.

Article 118. Capital contribution and share purchase by general finance companies

1. General finance companies may only use their charter capital and reserve funds to contribute capital or purchase shares under Clauses 2 and 3 of this Article.

2. General finance companies may contribute capital to, or purchase shares from, enterprises and investment funds.

3. General finance companies may only establish or acquire subsidiaries or affiliated companies operating in the fields of insurance, securities, debt management and asset use after obtaining the State Bank’s written approval.

4. The State Bank Governor shall specify conditions, dossiers and procedures for approving the establishment or acquisition of subsidiaries and affiliated companies of general finance companies; conditions for capital increase by subsidiaries and affiliated companies of general finance companies; operations of subsidiaries and affiliated companies of general finance companies in the fields of debt management and asset use.

5. General finance companies shall establish subsidiaries or affiliated companies in accordance with this Law and other relevant laws.

Article 119. Other business operations of general finance companies

1. General finance companies shall carry out other business operations as specified below in accordance with regulations of the State Bank Governor:

a/ Receiving capital entrusted by organizations and individuals for licensed credit extension; entrusting capital to other credit institutions for credit extension;

b/ Purchasing and selling state bank bills, corporate bonds and other valuable papers; except the purchase and sale of valuable papers specified at Point a, Clause 2 of this Article;

c/ Trading in foreign exchange and providing foreign exchange services;

d/ Providing asset preservation services for customers;

dd/ Other factoring-related services;

e/ Providing consultancy on banking activities and other business operations stated in licenses.

2. General finance companies may carry out other business activities as specified below in accordance with relevant laws:

a/ Purchasing and selling Government debt instruments, Government-guaranteed bonds, local government bonds;

b/ Issuing bonds to mobilize capital from organizations;

c/ Acting as insurance agents in accordance with the insurance business law and within the scope of operation of insurance agents specified in regulations of the State Bank Governor.

3. General finance companies may carry out other business operations relating to banking activities other than those specified in Clauses 1 and 2 of this Article under regulations of the State Bank Governor and other relevant laws.

Section 4

OPERATIONS OF SPECIALIZED FINANCE COMPANIES

Article 120. Banking activities of specialized finance companies

1. Factoring finance companies may carry out the following banking activities:

a/ Factoring;

b/ Banking activities specified in Clauses 1, 2, 3, 5 and 7, Article 115 of this Law.

2. Consumer credit finance companies may carry out the following banking activities:

a/ Issuing credit cards;

b/ Banking activities specified in Clauses 1, 2, 3, 5 and 7, Article 115 of this Law.

3. Financial leasing companies may carry out the following banking activities:

a/ Financial leasing;

b/ Banking activities specified in Clauses 1, 2, 3 and 7, Article 115 of this Law;

c/ Purchasing and sub-leasing assets in the form of financial leasing.

4. Financial leasing means medium- or long-term credit extension under a financial leasing contract on one of the following conditions:

a/ Upon the expiration of the lease term under the contract, the lessee is entitled acquire the ownership over the leased asset or continue to lease the asset as agreed upon by the two parties;

b/ Upon the expiration of the lease term under the contract, the lessee is given priority to purchase the leased asset at a nominal price lower than the real value of the leased asset at the time of purchase;

c/ The lease term of an asset is at least equal to 60% of the time required for asset depreciation;

d/ The total rental for an asset stated in the financial leasing contract is at least equal to the value of such asset at the time of contract signing.

5. Specialized finance companies shall maintain the ratio of outstanding balance of the main credit extension operation to the total credit extension outstanding balance under regulations of the State Bank Governor.

Article 121. Borrowing of loans, making of deposits, purchase and sale of valuable papers by specialized finance companies

The borrowing of loans, lending, making or receipt of deposits, purchase and sale of valuable papers by specialized finance companies must comply with Article 116 of this Law.

Article 122. Opening of accounts of specialized finance companies

1. Specialized finance companies shall open accounts under Clauses 1, 2 and 4, Article 117 of this Law.

2. Consumer credit finance companies that issue credit cards may open accounts at foreign banks in accordance with the foreign exchange law.

Article 123. Capital contribution and share purchase by specialized finance companies

1. Specialized finance companies may only use their charter capital and reserve funds to contribute capital or purchase shares under Clauses 2 and 3 of this Article.

2. Specialized finance companies may only contribute capital to, or purchase shares of, enterprises operating in the field of debt management and asset use.

3. Specialized finance companies may only establish or acquire subsidiaries or affiliated companies operating in the field of debt management and asset use after obtaining the State Bank’s written approval.

4. The State Bank Governor shall specify conditions, dossiers and procedures for approving the establishment or acquisition of subsidiaries and affiliated companies of specialized finance companies; conditions for capital increase at subsidiaries and affiliated companies of specialized finance companies; operations of subsidiaries and affiliated companies of specialized finance companies in the field of debt management and asset use.

5. Specialized finance companies shall establish subsidiaries or affiliated companies in the field of debt management and asset use in accordance with this Law and other relevant laws.

Article 124. Other business operations of specialized finance companies

1. Specialized finance companies may carry out other business operations as specified below in accordance with regulations of the State Bank Governor:

a/ Receiving entrusted capital for licensed credit extension;

b/ Entrusting capital to other credit institutions for such companies’ lending and credit extension;

c/ Purchasing and selling State Bank bills and deposit certificates issued by credit institutions and foreign bank branches in the country;

d/ Trading in foreign exchange and providing foreign exchange services;

dd/ Providing consultancy on banking activities and other business operations as stated in their licenses;

e/ Providing operating leases provided that the total value of assets under operating leases must not exceed 30% of their total assets, for financial leasing companies;

g/ Providing other factoring-related services, for factoring finance companies.

2. Specialized finance companies may carry out other business operations as specified below in accordance with relevant laws:

a/ Purchasing and selling government debt instruments, Government-guaranteed bonds and municipal bonds;

b/ Issuing bonds to mobilize capital from organizations;

c/ Acting as insurance agents in accordance with the insurance business law and in conformity with the scope of operations of insurance agents specified in regulations of the State Bank Governor.

3. Specialized finance companies may carry out other business operations relating to banking activities other than those specified in Clauses 1 and 2 of this Article in accordance with regulations of the State Bank Governor and other relevant laws.

Section 5

OPERATIONS OF CREDIT INSTITUTIONS BEING COOPERATIVES

Article 125. Operations of cooperative banks

1. Cooperative banks may carry out the following operations:

a/ Regulating capital and carrying out banking activities for people’s credit funds. Capital regulation of cooperative banks includes lending and receiving deposits from people’s credit funds;

b/ Other banking activities and business operations specified in Section 2 of this Chapter;

c/ Supporting the development of products and services and providing professional training to people’s credit funds’ personnel;

d/ Inspecting and supervising people’s credit funds;

dd/ Carrying out internal audit of people’s credit funds when necessary;

e/ Appointing qualified personnel to hold the titles of chairperson of Boards of Directors, Chief Executive Officer and other managerial and executive titles of people’s credit funds as requested by the State Bank.

2. Cooperative banks shall manage and use the fund for safety assurance of the system of people’s credit funds.

3. The State Bank Governor shall detail Clause 1 of this Article and the deduction, management and use of the fund for safety assurance of the system of people’s credit funds.

Article 126. Operations of people’s credit funds

1. People’s credit funds may receive Vietnam-dong deposits.

2. People’s credit funds may provide Vietnam-dong loans.

3. People’s credit funds may provide money transfer services and perform the operation of collection and payment for their members and customers, except opening of payment accounts for customers.

4. Other business operations of people’s credit funds, including:

a/ Receiving capital entrusted by organizations and individuals;

b/ Acting as payment service agents for cooperative banks with respect to their members and customers;

c/ Borrowing loans and making deposits at cooperative banks; borrowing loans from credit institutions and foreign bank branches. People’s credit funds may not provide loans or deposit money at each other;

d/ Contributing capital to cooperative banks;

dd/ Opening payment accounts at the State Bank, commercial banks, cooperative banks or foreign bank branches;

e/ Acting as agents in some fields relating to banking activities and asset preservation;

g/ Acting as insurance agents in accordance with the insurance business law and in conformity with the scope of operations of insurance agents specified in regulations of the State Bank Governor;

h/ Providing consultancy to their members on banking activities and other business operations as stated in their licenses.

5. The State Bank Governor shall detail this Article and geographical areas of operations of people’s credit funds in their licenses.

Section 6

OPERATIONS OF MICROFINANCE INSTITUTIONS

Article 127. Banking activities of microfinance institutions

1. Microfinance institutions may receive in Vietnam-dong deposits in the following forms:

a/ Compulsory savings under their regulations;

b/ Deposits of organizations and individuals, including voluntary deposits of microfinance customers, except those for payment purposes.

2. Microfinance institutions may provide Vietnam-dong loans. Microfinance institutions’ loans may be secured by compulsory savings or guaranteed by the group of depositors or loan borrowers.

3. Microfinance institutions shall maintain the ratio of the total balance of loans provided to low-income individuals and households and micro-enterprises to the total outstanding loan balance; and the maximum outstanding loan balance for a customer.

4. The State Bank Governor shall detail this Article and the identification of customers as low-income individuals or households.

Article 128. Opening of accounts of microfinance institutions

1. Microfinance institutions may open payment accounts at the State Bank, commercial banks and foreign bank branches.

2. Microfinance institutions may not open payment accounts for their customers.

Article 129. Borrowing of loans and making of deposits by microfinance institutions

1. Microfinance institutions may borrow loans, make and receive deposits at credit institutions and foreign bank branches under regulations of the State Bank Governor.

2. Microfinance institutions may borrow foreign loans in accordance with law.

Article 130. Other business operations of microfinance institutions

1. Other business operations of microfinance institutions include:

a/ Entrusting capital or receiving capital entrusted by organizations and individuals;

b/ Acting as agents to provide payment services for banks with respect to their customers;

c/ Providing collection and payment and money transfer services for microfinance customers;

d/ Acting as insurance agents in accordance with the insurance business law and in conformity with the scope of operations of insurance agents specified in regulations of the State Bank Governor;

dd/ Providing consultancy on banking activities and other business operations as stated in their licenses.

2. The State Bank Governor shall detail this Article.

Section 7

OPERATIONS OF FOREIGN BANK BRANCHES

Article 131. Operations of foreign bank branches

1. Foreign bank branches may carry out the operations specified in Sections 1 and 2 of this Chapter, except the following operations:

a/ Those specified in Article 111 of this Law;

b/ Operations that their parent banks are not licensed to carry out in countries where they are headquartered.

2. Foreign bank branches may provide some foreign exchange services in the international market to their customers in Vietnam under the foreign exchange law.

Chapter VI

FOREIGN REPRESENTATIVE OFFICES

Article 132. Establishment of foreign representative offices

Foreign credit institutions and other foreign institutions engaged in banking activities may establish representative offices in provinces and centrally run cities in Vietnam’s territory. In each province or centrally run city, a foreign credit institution or another foreign institution engaged in banking activities may establish only one representative office.

Article 133. Operations of foreign representative offices

Foreign representative offices may carry out the following operations under their licenses:

1. Functioning as liaison offices;

2. Conducting market surveys;

3. Promoting investment projects of foreign credit institutions or other foreign institutions engaged in banking activities in Vietnam;

4. Stepping up and monitoring the performance of contracts and other transactions and agreements between foreign credit institutions or other foreign institutions engaged in banking activities and Vietnamese credit institutions or businesses, and projects funded by foreign credit institutions or other foreign institutions engaged in banking activities in Vietnam;

5. Other operations specified in Vietnam’s law.

Chapter VII

RESTRICTIONS FOR SAFE OPERATIONS OF CREDIT INSTITUTIONS AND FOREIGN BANK BRANCHES

Article 134. Cases ineligible for credit extension

1. A credit institution or foreign bank branch may not extend credit to the following organizations and individuals: 

a/ Members of the Board of Directors/Members’ Council, members of the Supervisory Board, the Chief Executive Officer, Chief Operations Officer(s) and holders of equivalent titles defined in the credit institution’s charter; the Chief Executive Officer, Chief Operations Officer(s) of the foreign bank branch; legal entities being shareholders whose capital contribution representatives are members of the Board of Directors or Supervisory Board of the credit institution, for credit institutions being joint-stock companies, or legal entities being capital contributors or owners of the credit institution, for credit institutions being limited liability companies; 

b/ Spouses, parents, children and siblings of members of the Board of Directors Members’ Council or Supervisory Board, the Chief Executive Officer, Chief Operations Officer(s) and holders of equivalent titles defined in the credit institution’s charter; the Chief Executive Officer, Chief Operations Officer(s) of the foreign bank branch.

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

3. Credit institutions and foreign bank branches may not extend credit to customers on the basis of security provided by the entities specified in Clause 1 of this Article. Credit institutions and foreign bank branches may not provide security in any forms for credit extended to the entities defined in Clause 1 of this Article by other credit institutions and foreign bank branches.

4. Credit institutions may not extend credit to securities trading enterprises being their subsidiaries or affiliated companies.

5. Credit institutions may not extend credit on the basis of accepting their own securities or securities of their subsidiaries or affiliated companies as security.

6. Credit institutions and foreign bank branches may not extend credit as capital contribution or purchase of shares from other credit institutions. 

7. Credit extension specified in Clauses 1, 3, 4, 5 and 6 of this Article includes purchase and holding of, and investment in, corporate bonds.

Article 135. Credit extension restrictions

1. A credit institution or foreign bank branch may not extend unsecured credit or concessional credit to the following organizations and individuals:

a/ The audit institution and auditors that are carrying out audits at the credit institution or foreign bank branch; the inspection decision issuer, members of the inspection team, the person supervising activities of the inspection team that is carrying out inspection at the credit institution or foreign bank branch;

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 Supervisory Board, the Director, Deputy Director(s) of the people’s credit fund;

c/ Major shareholders and founding shareholders of the credit institution;

d/ An enterprise in which one of the entities specified in Clause 1, Article 134 of this Law owns more than 10% of its charter capital;

dd/ The person who appraises and approves the credit extension at the credit institution or foreign bank branch, except credit extension in the form of issuance of personal credit cards;

e/ Subsidiaries and affiliated companies of the credit institution, except credit extension to subsidiaries being credit institutions subject to mandatory transfer.

2. The total outstanding balance of loans provided to the entities specified at Points a, b, c, d and dd, Clause 1 of this Article must not exceed 5% of the equity of the credit institution or foreign bank branch.

3. Credit extension to the entities specified in Clause 1 of this Article shall be approved by the Board of Directors or the Members’ Council of the credit institution while credit extension to the entities specified at Point dd, Clause 1 of this Article must comply with regulations of the State Bank Governor. Credit extension shall be publicized within the credit institution or foreign bank branch.

4. The total outstanding balance of loans provided to an entity specified at Point e, Clause 1 of this Article must not exceed 10% of the equity of the credit institution; and the total outstanding balance of loans provided to all entities defined at Point e, Clause 1 of this Article must not exceed 15% of the equity of the credit institution.

5. The total outstanding balance of loans specified in Clause 2 of this Article includes the total amount of purchase and holding of, and investment in, bonds issued by the entities specified at Points a, c and d of Clause 1 of this Article; the total outstanding balance of loans specified in Clause 4 of this Article includes the total amount of purchase and holding of, and investment in, bonds issued by the entities specified at Point e, Clause 1 of this Article.

Article 136. Credit extension limits

1. For a commercial bank, cooperative bank, foreign bank branch, people’s credit fund or microfinance institution, the total balance of credit extended to a single customer or to a single customer and its/his/her related persons must not exceed:

a/ 14% of its equity for a single customer; or 23% of its equity for a single customer and its/his/her related persons, to be applied from the effective date of this Law to before January 1, 2026;

b/ 13% of its equity for a single customer; or 21% of its equity for a single customer and its/his/her related persons, to be applied from January 1, 2026, to before January 1, 2027;

c/ 12% of its equity for a single customer; or 19% of its equity for a single customer and its/his/her related persons, to be applied from January 1, 2027, to before January 1, 2028;

d/ 11% of its equity for a single customer; or 17% of its equity for a single customer and its/his/her related persons, to be applied from January 1, 2028, to before January 1, 2029; or,

dd/ 10% of its equity for a single customer; or 15% of its equity for a single customer and its/his/her related persons, to be applied from January 1, 2029.

2. For a non-bank credit institution, the total balance of credit extended to a single customer or to a single customer and its/his/her related persons must not exceed 15% or 25% of its equity, respectively.

3. The total balance of extended credit specified in Clause 1 or 2 of this Article is exclusive of loans from the Government’s entrusted capital, or loans provided to organizations or individuals for which/whom the entrusted credit institutions or foreign bank branches do not bear risks, or loans provided to other credit institutions or foreign bank branches.

4. The total balance of extended credit specified in Clause 1 or 2 of this Article is inclusive of the total amount used to purchase, hold or invest in bonds issued by customers and their related persons.

5. The limits of and conditions for credit extension for investment and trading in stocks and corporate bonds by credit institutions and foreign bank branches must comply with the State Bank Governor’s regulations.

6. In case a single customer and its/his/her related persons need a capital amount exceeding the limit specified in Clause 1 or 2 of this Article, credit institutions and foreign bank branches may extend syndicated credit under the State Bank Governor’s regulations.

7. In special cases of performance of socio-economic tasks, if the credit syndication capacity of credit institutions and foreign bank branches fails to meet the capital need of a single customer, the Prime Minister shall, on a case-by-case basis, decide on a maximum credit extension level in case the total balance of credit extension exceeds the limit specified in Clause 1 or 2 of this Article.

The Prime Minister shall provide conditions, dossiers and procedures for requesting approval of a maximum credit extension level in case the total balance of credit extension exceeds the limit specified in Clause 1 or 2 of this Article.

8. The total amount of credit extended by a credit institution or foreign bank branch specified in Clause 7 of this Article must not exceed 4 times the equity of such credit institution or foreign bank branch.

9. Credit card limits for the individuals specified in Clause 1, Article 134, and at Point dd, Clause 1, Article 135, of this Law must comply with the State Bank Governor’s regulations.

Article 137. Capital contribution and share purchase limits

1. The level of capital contribution or share purchase by a commercial bank and its subsidiaries and affiliated companies to/from a single enterprise operating in the fields specified in Clause 4, Article 111 of this Law must not exceed 11% of the charter capital of such enterprise.

2. The total level of capital contribution and share purchase by a commercial bank to/from enterprises and credit institutions, including also subsidiaries and affiliated companies of such commercial bank as specified in Clause 2, 3, 4 and 8, Article 111 of this Law must not exceed 40% of the charter capital and reserve funds of the commercial bank.

3. The level of capital contribution or share purchase by a finance company and its subsidiaries and affiliated companies to/from a single enterprise or investment fund as specified in Clause 2, Article 118 and Clause 2, Article 123 of this Law must not exceed 11% of the charter capital of such enterprise or investment fund.

4. The total level of capital contribution and share purchase by a finance company in enterprises and investment funds, including also subsidiaries and affiliated companies of such finance company as specified in Clauses 2 and 3 of Article 118, and Clauses 2 and 3, Article 123, of this Law, must not exceed 40% of the charter capital and reserve funds of the finance company.

5. A credit institution and its subsidiaries may not contribute capital to, or purchase shares from:

a/ Enterprises and other credit institutions that are shareholders or capital contributors of such credit institution; and,

b/ Enterprises and other credit institutions that are related persons of major shareholders or capital contributors of such credit institution.

6. The level of capital contribution or share purchase specified in Clause 1 or 3 of this Article is exclusive of the level of capital contribution or share purchase by a fund management company that is a subsidiary or an affiliated company of a commercial bank or finance company in a single enterprise with the use of funds managed by such fund management company.

Article 138. Prudential ratios

1. Credit institutions and foreign bank branches shall maintain the following prudential ratios:

a/ The solvency ratio;

b/ The capital adequacy ratio of 8% or another higher percentage as set by the State Bank Governor in each period;

c/ The maximum foreign currency and gold amount against equity;

d/ The ratio of purchase, holding of, or investment in, government bonds and government-guaranteed bonds;

dd/ Other prudential ratios.

2. Commercial banks, cooperative banks and foreign bank branches participating in the national inter-bank payment system shall make a deposit at the State Bank and hold a minimum quantity of valuable papers permitted for mortgage as specified by the State Bank Governor in each period.

3. The State Bank Governor shall specify the prudential ratios defined in Clause 1 of this Article for each type of credit institution or foreign bank branch.

 4. The total of the capital amount invested by a credit institution in another credit institution and its subsidiaries in the form of capital contribution or share purchase and the amount invested in the form of capital contribution or share purchase to/from enterprises operating in the fields of banking, insurance and securities may not be included in its equity when calculating prudential ratios.

Article 139. Real estate business

 Credit institutions may not deal in real estate, except the following cases:

1. They purchase, invest in and own real estate for use as their business locations or working offices or warehouses directly serving their professional operations;

2. They lease part of their own business locations which are is left idle;

3. They hold real estate as a result of debt handling. Within 5 years after issuing a decision to handle collateral being real estate, credit institutions shall sell, transfer or redeem such real estate. In case of redemption of the real estate, they shall ensure the use purposes specified in Clause 1 of this Article and the ratio of investment in fixed assets specified in Clause 3, Article 144 of this Law.

Article 140. Requirements on assurance of safety of e-transactions in banking activities

Credit institutions and foreign bank branches shall ensure safety and confidentiality of e-transactions in banking activities under the State Bank Governor’s regulations and the e-transactions law.

Article 141. Rights and obligations of controlling companies

1. To exercise their rights and perform their obligations in the capacity of capital contributors, owners or shareholders in their relationship with subsidiaries or affiliated companies in accordance with this Law and other relevant laws.

2. To establish and perform contracts and other transactions and relations between controlling companies and subsidiaries or affiliated companies in an independent and equitable manner under the conditions applicable to independent legal subjects.

3. To refrain from intervening in the organization and operation of subsidiaries or affiliated companies beyond the rights and obligations of owners, capital contributors or shareholders.

Article 142. Capital contribution and share purchase between subsidiaries or affiliated companies and controlling companies

1. A subsidiary or an affiliated company of a credit institution may neither contribute capital to, nor purchase shares from, such credit institution.

2. A credit institution that is a subsidiary or an affiliated company of a controlling company may neither contribute capital to, nor purchase shares from, such controlling company or another subsidiary or affiliated company of such controlling company, except the case of implementing an approved mandatory transfer plan.

Article 143. Formulation of tentative remedial plans in case of application of early intervention

1. A commercial bank or foreign bank branch shall formulate a tentative remedial plan in case of early intervention.

2. A remedial plan specified in Clause 1 of this Article must have the following principal contents:

a/ Information on, and evaluation of, the organizational structure and business activities of the commercial bank or foreign bank branch;

b/ Financial status and operation of the commercial bank or foreign bank branch;

c/ Remedial measures for each case specified in Clause 1, Article 156 of this Law;

d/ Roadmap and time limit for taking each remedial measure.

3. The measures specified at Point c, Clause 2 of this Article include:

a/ Increasing the charter capital or allocated capital and the time of implementation; formulating a roadmap to reduce shareholding rates and capital contributions of shareholders and capital contributors specified at Point b, Clause 1, Article 159 of this Law;

b/ Improving liquidity; increasing the holding of liquid assets; selling or transferring assets and taking other measures to meet the requirements for assurance of safety in banking activities;

c/ Improving business efficiency;

d/ Strengthening managerial and executive capacity;

dd/ Handling financial problems and weaknesses, non-performing loans and collateral, and measures to remedy violations of law;

e/ Communications and information technology measures to overcome difficulties in terms of liquidity.

4. A remedial plan specified in Clause 1 of this Article shall be approved by the General Meeting of Shareholders, Members’ Council, the owner or the owner’s representative agency of a commercial bank or the parent bank of a foreign bank branch, and sent to the State Bank within 10 days after it is approved.

5. At least every 2 years, commercial banks and foreign bank branches shall update and adjust the remedial plan specified in Clause 1 of this Article. The updated and adjusted plan shall be approved by the General Meeting of Shareholders, Members’ Council, the owner or the owner’s representative agency of a commercial bank or the parent bank of a foreign bank branch, and sent to the State Bank within 10 days after it is approved.

6. In case a commercial bank or foreign bank branch fails to formulate a remedial plan specified in Clause 4 of this Article or fails to update or adjust the remedial plan under Clause 5 of this Article, the State Bank shall apply one or several of the restrictive measures specified in Clause 2, Article 157 of this Law.

7. The remedial plan specified in this Article shall be formulated and approved before July 1, 2025, or within 1 year from the date of issuance of a license for establishment and operation of a commercial bank or a license for establishment of a foreign bank branch.

Chapter VIII

FINANCE, ACCOUNTING AND REPORTING

Article 144. Capital of and capital use by credit institutions and foreign bank branches

1. A credit institution’s or foreign bank branch’s capital includes equity, mobilized capital, and other capital amounts as specified by law.

2. A credit institution or foreign bank branch may use capital for business activities in accordance with this Law and other relevant laws.

3. A credit institution or foreign bank branch may purchase and invest in fixed assets to directly serve its operation, ensuring the residual value ratio of fixed assets:

a/ Not exceeding 50% of the charter capital and charter capital addition reserve fund as recorded in accounting books, for commercial banks, cooperative banks, non-bank credit institutions and microfinance institutions;

b/ Not exceeding the charter capital and charter capital addition reserve fund as recorded in accounting books, for people’s credit funds; or,

c/ Not exceeding 50% of the allocated capital and allocated capital addition reserve fund as recorded in accounting books, for foreign bank branches.

Article 145. Revenues and revenue recognition principles

1. Revenues from business activities of a credit institution or foreign bank branch include:

a/ Income from interests and similar incomes;

b/ Income from service activities;

c/ Revenue from foreign exchange and gold trading;

d/ Revenue from trading in securities, except stocks;

dd/ Revenue from capital contribution or transfer of capital contributions and shares;

e/ Revenue from other activities;

g/ Other incomes as specified by law.

2. Revenues of credit institutions and foreign bank branches shall be determined in conformity with Vietnam’s accounting standards and relevant regulations, accompanied by valid invoices or documents and fully accounted.

3. For receivables that have been accounted as revenues but are later evaluated as unable to be collected or are not collected on the due date, a credit institution or foreign bank branch shall account such receivables as a decrease in revenues in case they occur in the same accounting period, or account them as expenses in case they occur in different accounting periods and monitor such receivables off balance sheet in order to urge the collection and handling thereof in accordance with law; and account received amounts as revenues.

4. For revenues from credit extension, a credit institution or foreign bank branch shall evaluate the ability to collect debts and classify debts in accordance with law for use as a basis for accounting receivable interests, and account receivable interests from credit extension as revenues under the Government’s regulations.

Article 146. Expenses and expense recognition principles

1. Expenses of a credit institution or foreign bank branch include:

a/ Expenses for interests and similar expenses;

b/ Expenses for service activities;

c/ Expenses for foreign exchange and gold trading;

d/ Expenses for trading in securities permitted for trading in accordance with this Law;

dd/ Expenses for capital contribution and transfer of capital contributions and shares;

e/ Expenses for other business activities;

g/ Expenses for payment of taxes, charges and fees;

h/ Expenses for managers, executive officers and employees;

i/ Expenses for management and official duties;

k/ Asset-related expenses;

l/ Expenses for making deductions for provisions;

m/ Expenses for deposit preservation and insurance;

n/ Other expenses.

2. Expenses of credit institutions and foreign bank branches are actually arising expenses related to business activities of such credit institutions and foreign bank branches. These expenses must adhere to the principle of compatibility between revenues and expenses; and be accompanied by valid invoices and documents as specified by law. Credit institutions and foreign bank branches may not account as expenses the expenses covered by other funding sources. The determination and accounting of expenses must comply with Vietnam’s accounting standards and relevant regulations.

3. The determination of expenses for calculating enterprise income tax must comply with the law on enterprise income tax.

Article 147. Risk provisions

1. Credit institutions and foreign bank branches shall make deductions for provisions for risks in their operation. These risk provisions shall be accounted as operating expenses.

2. The classification of assets must comply with the State Bank Governor’s regulations.

3. The use of risk provisions does not change the debt repayment obligation of customers for debts eligible for use of risk provisions and responsibilities of organizations and individuals related to the debts. The level and method of making deductions for risk provisions and the use of provisions for handling risks in the operation of credit institutions and foreign bank branches must comply with the Government’s regulations.

4. In special cases of performance of socio-economic and external affairs tasks, the Prime Minister shall, on a case-by-case basis, decide on the classification of assets, level and method of making deductions for risk provisions and the use of provisions for handling risks in operation based on the proposal of the State Bank.

5. In case a credit institution or foreign bank branch has recovered a capital amount already offset by risk provisions, the recovered amount shall be accounted as revenue of the credit institution or foreign bank branch.

Article 148. Distribution of profits and funds

1. Profits of a credit institution or foreign bank branch that are left after offsetting the previous year’s losses in accordance with the Law on Enterprise Income Tax and paying enterprise income tax shall be distributed in accordance with the Government’s regulations.

2. Annually, a credit institution or foreign bank branch shall make deductions from its after-tax profits to set up and maintain the following funds:

a/ The charter capital addition reserve fund or the allocated capital addition reserve fund, which shall be set up at the rate of 10% of after-tax profits. This fund must not exceed the charter capital or allocated capital of the credit institution or foreign bank branch;

b/ The financial provisions fund;

c/ The development investment fund, for a credit institution with over 50% of its charter capital held by the State or a cooperative credit institution;

d/ Other reserve funds as specified by law.

3. A commercial bank being a joint-stock company with over 50% of its charter capital held by the State may distribute share dividends to increase its charter capital. The share dividend ratio shall be decided by the Prime Minister.

4. Credit institutions and foreign bank branches shall manage and use funds in accordance with law.

Article 149. Fiscal year

1. A fiscal year of credit institutions and foreign bank branches starts on January 1 and ends on December 31 of a calendar year.

2. The first fiscal year of credit institutions and foreign bank branches starts on the date of grant of licenses and ends on December 31 of a calendar year.

Article 150. Accounting

Credit institutions and foreign bank branches shall conduct accounting in accordance with the accounting law; be held responsible before law for the accuracy and truthfulness of revenues and expenditures, and comply with regulations on invoices and accounting documents.

Article 151. Financial regimes

1. Credit institutions and foreign bank branches shall practice financial autonomy.

2. Financial regimes applicable to credit institutions and foreign bank branches must comply with this Law and other relevant laws.

3. The Government shall provide in detail financial regimes, revenues, expenses, and profit distribution applicable to credit institutions and foreign bank branches.

Article 152. Reporting

1. Credit institutions and foreign bank branches shall implement the regime of reporting and information provision in accordance with accounting, statistics and statistical survey laws.

2. Credit institutions and foreign bank branches shall make periodical reports on professional operations under the State Bank Governor’s regulations.

3. In addition to the reports specified in Clauses 1 and 2 of this Article, a credit institution or foreign bank branch shall promptly report to the State Bank in the following cases:

a/ Occurrence of abnormal developments in professional operations that are likely to seriously affect the business situation of the credit institution or foreign bank branch;

b/ Occurrence of changes in the organization, governance, administration or financial status of a major shareholder or other changes that seriously affect business activities of the credit institution or foreign bank branch; or in the purchase, sale or transfer of shares and capital contributions of major shareholders;

c/ Renaming of a branch of the credit institution; suspension of transactions for less than 5 working days; or listing of stocks on the domestic securities market.

4. Subsidiaries and affiliated companies of credit institutions shall send their financial statements and operation reports to the State Bank when so requested.

5. Within 90 days after the end of a fiscal year, credit institutions and foreign bank branches shall send annual reports to the State Bank in accordance with law.

6. Within 180 days after the end of a fiscal year, joint-venture credit institutions, wholly foreign-owned credit institutions, foreign bank branches and foreign representative offices shall send to the State Bank annual financial statements of:

a/ Capital contributors of joint-venture credit institutions or wholly foreign-owned credit institutions that are foreign credit institutions;

b/ Owners of wholly foreign-owned credit institutions;

c/ Parent banks of foreign bank branches;

d/ Foreign credit institutions and other foreign institutions engaged in banking activities that have foreign representative offices.

7. Joint-venture credit institutions, wholly foreign-owned credit institutions and foreign bank branches shall promptly send written reports to the State Bank when the foreign credit institutions specified at Points a, b and c, Clause 6 of this Article fall into one of the following changes:

a/ They undergo division, splitting, merger, consolidation, liquidation, bankruptcy or dissolution;

b/ Their names or head office locations are changed;

c/ Major shareholders or members of the Board of Directors or Executive Board are changed;

d/ They undergo extraordinary changes that greatly affect their organization and operation. 

Article 153. Reports of controlling companies

1. Within 120 days after the end of a fiscal year, in addition to reports and documents provided by law, controlling companies shall make and send to the State Bank consolidated financial statements which have been audited under the accounting law.

2. Within 90 days after the end of a fiscal year, a controlling company shall make and send to the State Bank a general report on trading transactions and other transactions between the controlling company and its subsidiaries and affiliated companies.

Article 154. Disclosure of financial statements

Within 120 days after the end of a fiscal year, credit institutions and foreign bank branches shall disclose their financial statements in accordance with law, except credit institutions currently placed under special control.

Article 155. Transfer of profits and assets abroad

1. Foreign bank branches and wholly foreign-owned credit institutions in Vietnam may transfer aboard profits left after making deductions to set up funds and fulfilling financial obligations under Vietnam’s law.

2. Foreign capital contributors in a joint-venture credit institution may transfer abroad their divided profits after the joint-venture credit institution has made deductions to set up funds and fulfilled financial obligations under Vietnam’s law.

3. Foreign bank branches, wholly foreign-owned credit institutions, and foreign capital contributors in joint-venture credit institutions may transfer abroad assets left after asset liquidation and termination of operation in Vietnam.

4. The transfer of money and other assets abroad specified in Clauses 1, 2 and 3 of this Article must comply with Vietnam’s law.

Chapter IX

APPLICATION OF EARLY INTERVENTION TO CREDIT INSTITUTIONS AND FOREIGN BANK BRANCHES

Article 156. Application of early intervention to credit institutions and foreign bank branches

1. The State Bank shall consider and decide to apply early intervention when a credit institution or foreign bank branch falls into one or several of the following cases:

a/ Its cumulative loss exceeds 15% of the value of its charter capital, allocated capital and reserve funds stated in the audited latest financial statement or stated in the inspection or audit conclusions of a competent state agency, and it fails to maintain the capital adequacy ratio specified at Point b, Clause 1, Article 138 of this Law;

b/ It is ranked below the average level under the State Bank Governor’s regulations;

c/ It fails to maintain the solvency ratio specified at Point a, Clause 1, Article 138 of this Law for 30 consecutive days;

d/ It fails to maintain the capital adequacy ratio specified at Point b, Clause 1, Article 138 of this Law for 6 consecutive months;

dd/ It suffers a mass withdrawal as reported to the State Bank.

2. The State Bank shall send a written request to a credit institution or foreign bank branch that falls into one or several of the cases specified in Clause 1 of this Article for the latter to:

a/ Implement one or several of requirements and restrictive measures specified in Article 157 of this Law within a specified time limit;

b/ For the credit institution, update and immediately implement the remedial plan specified in Article 143 of this Law or formulate the remedial plan specified in Article 158 of this Law with specified time limits for the formulation and approval of the remedial plan; or set a time limit for a cooperative bank to give opinions on the people’s credit fund’s remedial plan specified in Clause 2, Article 158 of this Law;

c/ For the foreign bank branch, update and immediately implement the remedial plan specified in Article 143 of this Law or formulate the remedial plan specified in Article 158 of this Law with specified time limits for the formulation and approval of the remedial plan.

3. Credit institutions and foreign bank branches shall immediately implement the requirements and restrictive measures stated in the State Bank’s written requests specified in Clause 2 of this Article. In case a credit institution or foreign bank branch fails to implement these requirements and restrictive measures, the State Bank shall additionally apply one or several of the restrictive measures specified in Clause 2, Article 157 of this Law.

4. When necessary, the State Bank may request a credit institution or foreign bank branch to hire an independent audit institution to audit financial statements and evaluate the financial status for use as a basis for formulating a remedial plan.

Article 157. Requirements and restrictive measures for credit institutions and foreign bank branches subject to application of early intervention

1. Requirements for credit institutions and foreign bank branches subject to application of early intervention include:

a/ Increasing the charter capital or allocated capital; intensifying the holding of liquid assets and implementing other solutions to meet the requirements for assurance of safety in banking activities;

b/ Reducing operation and management expenses, remuneration, salaries and bonuses; requesting reimbursement of remuneration and bonuses for managers, executive officers, and members of the Supervisory Board;

c/ Enhancing the risk management; reorganizing the managerial and executive apparatus.

2. Restrictive measures for credit institutions and foreign bank branches subject to application of early intervention include:

a/ Refraining from paying dividends or profits or distributing after-tax profits after making deductions to set up funds, or transferring profits to home countries; restricting the transfer of shares, capital contributions and assets;

b/ Limiting ineffective and high-risk business activities; reducing the limits of credit extension, capital contribution and share purchase; and limiting credit growth;

c/ Terminating or suspending one or several of banking activities or other business activities that show signs of violations of law; refraining from supplementing contents of banking activities or other new business activities, and from expanding the operation network;

d/ Terminating the work of managers and executive officers who commit violations of law or cause major risks to the operation of credit institutions or foreign bank branches; requesting the election or appointment to replace managers and executive officers who commit violations of law or cause major risks to the operation of credit institutions or foreign bank branches;

dd/ Other measures within the State Bank’s competence.

Article 158. Formulation, updating and approval of remedial plans

1. A commercial bank or foreign bank branch that has its remedial plan specified in Article 143 of this Law approved shall, based on the State Bank’s written request specified in Clause 2, Article 156 of this Law, identify the cause(s) leading to application of early intervention, and update and submit the remedial plan to the Board of Directors, Members’ Council of the commercial bank, or the parent bank of the foreign bank branch for approval, and send such plan to the State Bank within 10 days after it is approved.

2. Except the case specified in Clause 1 of this Article, a credit institution or foreign bank branch shall identify the cause(s) leading to application of early intervention and formulate a remedial plan with the contents specified in Clauses 2 and 3, Article 143 of this Law, and submit it to the Board of Directors, Members’ Council, or the parent bank of the foreign bank branch for approval, and send such plan to the State Bank within 10 days after it is approved.

Remedial plans of people’s credit funds shall be sent to cooperative banks for opinion before being approved.

3. In case the State Bank has opinions on the remedial plans specified in Clauses 1 and 2 of this Article, credit institutions and foreign bank branches shall adjust the remedial plans and send them to the State Bank within the time limit set by the State Bank.

4. In case a remedial plan’s contents include the support measures specified in Article 159 of this Law, within 30 days after receiving the remedial plan that meets the requirements of the State Bank, the State Bank shall consider and approve the application of support measures to the credit institution subject to application of early intervention.

Article 159. Support measures applicable to credit institutions subject to application of early intervention

1. During the implementation of a remedial plan, a credit institution subject to application of early intervention may apply the following support measures after obtaining the State Bank’s written approval:

a/ To implement a roadmap for compliance with one or several of the limits and ratios specified in Articles 136 and 138 of this Law;

b/ When implementing solutions to increase the charter capital under the remedial plan, shareholders and capital contributors may own shares and capital contributions that exceed the limits specified in Articles 63 and 77 of this Law. Shareholders and capital contributors shall formulate a roadmap for reducing shareholding rates and capital contributions so as to comply with the limits.

2. During the implementation of the remedial plan, if a credit institution subject to application of early intervention has a cumulative loss exceeding 50% of the value of its charter capital and reserve funds stated in the audited latest financial statement or stated in the inspection or audit conclusions of a competent state agency, in addition to the measures specified in Clause 1 of this Article, the credit institution may apply one or several of the following support measures after obtaining the State Bank’s written approval:

a/ In case the money amount to be deducted for risk provisions is larger than the revenue-expense difference based on business results in a year, excluding the amount temporarily deducted for risk provisions in the year, the money amount to be deducted for risk provisions shall be determined to be equal to such revenue-expense difference.

b/ In case a credit institution has receivable interests to be written off, it may distribute such receivable interests based on its financial capacity in adherence to the principle that the total of the distributed amount of receivable interests to be written off and the money amount to be deducted for risk provisions is equal to the revenue-expense difference based on business results of the credit institution in a year. The time limit for distributing receivable interests to be written off is 5 years from the date the State Bank’s approval is obtained, and such only applies to receivables arising to the time when the State Bank issues the written request specified in Clause 2, Article 156 of this Law. The Government shall, when necessary, specify cases in which the time limit for credit institutions to distribute interest receivables to be written off may last for between over 5 years and 10 years;

c/ People’s credit funds may borrow loans from the fund to ensure safety of the system of people’s credit funds with preferential interest rates under the State Bank Governor’s regulations;

d/ People’s credit funds may receive support from cooperative banks through the latter’s sending of personnel to participate in governance and administration; and support in terms of information technology;

dd/ Other measures within the State Bank’s competence.

Article 160. Implementation of remedial plans

1. Credit institutions and foreign bank branches shall implement the remedial plans specified in Article 158 of this Law immediately after such plans are approved.

2. In the course of implementation of the remedial plans, credit institutions and foreign bank branches shall report on the implementation progress and results at the request of the State Bank.

3. The State Bank shall supervise the implementation of the remedial plans, and may adjust the requirements and restrictive measures applicable to credit institutions and foreign bank branches specified at Point a, Clause 2, Article 156 of this Law, and request credit institutions and foreign bank branches to adjust contents of the remedial plans.

4. In case of extension of the time limit for implementing the remedial plans, credit institutions and foreign bank branches shall comply with Article 158 of this Law.

5. In case of modification or supplementation of the support measures specified in Article 159 of this Law, credit institutions and foreign bank branches shall submit the modifications or supplementations to the State Bank for obtaining the latter’s written approval before implementation.

6. During the implementation of the remedial plan, in case there is a merging or consolidating credit institution, the credit institution subject to application of early intervention shall be merged or consolidated under the provisions on reorganization of credit institutions in Article 201 of this Law.

7. During the implementation of the remedial plan, in case the transfer of shares or capital contributions, or the increase in charter capital leads to the transformation of the credit institution subject to application of early intervention, such transformation must comply with Article 201 of this Law.

8. Upon the expiration of the time limit for implementation of the remedial plan, if a foreign bank branch fails to remedy the situation that leads to application of early intervention, it shall carry out procedures for dissolution, operation termination, or capital and asset liquidation or freezing under Chapter XIII of this Law.

Article 161. Termination of application of early intervention

1. A credit institution may have the application of early intervention terminated in the following cases:

a/ The State Bank issues a document to terminate the implementation of the written request specified in Clause 2, Article 156 of this Law after the credit institution has remedied the situation that leads to application of early intervention specified in Clause 1, Article 156 of this Law and reports thereof in writing to the State Bank;

b/ The State Bank issues a written approval of merger or consolidation of the credit institution with another one under Article 201 of this Law;

c/ A competent state agency issues a decision on dissolution or bankruptcy of the credit institution in accordance with law;

d/ The State Bank issues a decision to place the credit institution under special control under Article 162 of this Law.

2. A foreign bank branch may have the application of early intervention terminated in the following cases:

a/ The State Bank issues a document to terminate the implementation of the written request specified in Clause 2, Article 156 of this Law after the foreign bank branch has remedied the situation that leads to application of early intervention specified in Clause 1, Article 156 of this Law and reports thereof in writing to the State Bank;

b/ The State Bank issues a written approval of dissolution or operation termination of the foreign bank branch in accordance with law.

Chapter X

SPECIAL CONTROL OF CREDIT INSTITUTIONS

Section 1

GENERAL PROVISIONS

Article 162. Application of special control of credit institutions

1. The State Bank shall consider and decide to place a credit institution under special control when the credit institution falls into one of the following cases:

a/ The credit institution subject to application of early intervention fails to send a remedial plan to the State Bank or fails to adjust the remedial plan as requested in writing by the State Bank;

b/ The credit institution subject to application of early intervention is unable to implement the remedial plan within the specified time limit;

c/ The credit institution fails to remedy the situation that leads to application of early intervention though the time limit for implementation of the remedial plan has expired;

d/ The credit institution suffers a mass withdrawal, which is likely to affect the safety of the system of credit institutions;

dd/ The credit institution’s capital adequacy ratio falls to below 4% for 6 consecutive months;

e/ The credit institution is dissolved and unable to fully pay its debts during the process of asset liquidation.

2. From the date a credit institution is placed under special control, its owners, capital contributors and shareholders shall report on the use of shares and capital contributions; refrain from transferring their shares and capital contributions; and refrain from using their shares and capital contributions as collateral, unless required by a competent state agency.

3. From the date a credit institution is placed under special control, the outstanding principals and interests of its refinanced loans at the State Bank shall be converted into the outstanding principals and interests of special loans and the refinancing mechanism shall continue to apply to such refinanced loans. The outstanding principals and interests of the loans of people’s credit funds at cooperative banks shall be converted into the outstanding principals and interests of special loans and the mechanism for provision of loans by cooperative banks to people’s credit funds shall continue to apply.

4. In order to ensure the safety of the system of credit institutions system and ensure social order and safety when dealing with credit institutions placed under special control, the Government shall decide on application of special measures at the proposal of the State Bank and report thereon to the National Assembly at its nearest session.

Article 163. Tasks and powers of the State Bank and State Bank Governor toward credit institutions placed under special control

1. The State Bank shall form a Special Control Board to control the operation of a credit institution placed under special control.

2. Tasks and powers of the State Bank toward a credit institution placed under special control:

a/ To respond to recommendations of the Special Control Board;

b/ To appoint the Chairperson and other members of the Board of Directors; the Chairperson and other members of the Members’ Council; the Head and other members of the Supervisory Board; the Chief Executive Officer; Chief Operations Officers and holders of equivalent positions as specified in the charter of the credit institution placed under special control;

c/ To decide on and adjust the contents, scope and network of operation of the credit institution placed under special control;

d/ To request the owners, capital contributors and shareholders of the credit institution placed under special control to report on the use of their shares and capital contributions; to refrain from transferring their shares and capital contributions; to refrain from using their shares and capital contributions as collateral;

dd/ Other tasks and powers as provided in this Law.

3. The State Bank Governor shall provide special control of a credit institution, including the following contents:

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

b/ Composition and number of members, and structure, operation mechanism, tasks and powers of the Special Control Board suitable to the form of special control as well the actual situation of the credit institution placed under special control;

c/ Responsibilities of related agencies, institutions and individuals;

d/ Other contents in service of special control and formulation of a plan on restructuring of the credit institution placed under special control.

Article 164. Tasks and powers of a Special Control Board

1. To request the concerned credit institution placed under special control to review and adjust its organizational structure, operational network and business activities, focusing on debt recovery, handling of collaterals and cost cutting.

2. To request the credit institution placed under special control to propose, formulate and implement the recovery plan, plan on merger, consolidation or transfer of all shares or capital contributions, or dissolution plan; to request the mandatory transferee to formulate, complete and implement a mandatory transfer plan in accordance with this Law.

3. To coordinate with the credit institution placed under special control in formulating a bankruptcy plan in accordance with this Law.

4. To suspend one or more than one business activity of credit institutions placed under special control if such activity(ies) is/are likely to increase risks for such credit institutions or unconformable with the approved mandatory transfer plans or bankruptcy plans.

5. To terminate or suspend the right to govern, administer and control credit institutions of, and propose the State Bank to appoint personnel to replace, the Chairperson or other members of the Board of Directors/Members’ Council; Head and other members of the Supervisory Board; Chief Executive Officer, Chief Operations Officers, and holders of other equivalent titles defined in the charter of credit institutions placed under special control.

6. To request the Board of Directors; the Members’ Council; and Chief Executive Officer to remove from office or suspend the work of persons who commit violations of law or fail to abide by the approved restructuring plan or the direction of the Special Control Board.

7. To propose the State Bank to decide to change of the form of special control, extend or terminate special control; provide special loans, extend special loan periods, retrieve special loans, liquidate assets, and revoke the license of the credit institution placed under special control.

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

Article 165. Responsibilities of credit institutions placed under special control

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

a/ Formulate a restructuring plan as requested by the Special Control Board;

b/ Implement the restructuring plan approved by a competent agency;

c/ Implement the State Bank’s decisions and requests specified in Article 163 of this Law;

d/ Implement the Special Control Board’s decisions and requests specified in Article 164 of this Law;

2. The Board of Directors/Members’ Council, Supervisory Board and Chief Executive Officer of a credit institution placed under special control have the following responsibilities:

a/ To perform the responsibilities specified in Clause 1 of this Article;

b/ To govern, administer and control business activities of the credit institution, ensuring its asset safety;

c/ The Board of Directors shall decide on issues falling within the competence of the General Meeting of Shareholders or General Meeting of Members and approve the restructuring plan in accordance with this Law.

Article 166. Governance, administration and operation of credit institutions placed under special control

1. During the period of special control, a credit institution placed under special control shall not be requested to comply with Articles 136, 137, 138, and Clause 3, Article 144, of this Law. In case the risk provision amount to be set up is higher than the revenue-expense difference according to the credit institution’s actual business results, exclusive of the risk provision amount already set up in the year, the risk provision amount shall equal the revenue-expense difference.

2. Credit institutions placed under special control shall not be required to implement regulations on required reserves.

3. Credit institutions placed under special control shall be exempt from deposit insurance premiums and charge for participation in the people’s credit fund system safety assurance fund.

4. The organization of the General Meeting of Shareholders/General Meeting of Members and disclosure of information of a credit institution placed under control shall be carried out at the written request of the State Bank in order to ensure safety for the system of credit institutions.

5. The quantity of members, structure and term of office of the Board of Directors/ Members’ Council and Supervisory Board of a credit institution placed under special control shall be decided by the State Bank in conformity with the actual state of its operation.

When the term of office of the credit institution’s Board of Directors/Members’ Council and Supervisory Board expires, if the credit institution has yet to elect or appoint the Board of Directors/Members’ Council and Supervisory Board of the new term of office, the Board of Directors/Members’ Council and Supervisory Board shall continue performing the governance and control of the credit institution in accordance with law until the Board of Directors/Members’ Council and Supervisory Board of the new term of office takes over the work.

Article 167. Assessment of the actual state of credit institutions placed under special control

1. The Special Control Board shall request a credit institution placed under special control specified at Points a, b, c, d and dd, Clause 1, Article 162 of this Law to hire an independent audit institution to audit its financial statements, except credit institutions being people’s credit funds. The hiring of an independent audit institution must be completed within 60 days after the issuance of a decision on establishment of the Special Control Board.

2. Within 30 days after an audit result report is issued, the credit institution shall complete the self-assessment of its actual state.

3. Within 60 days after an audit result report is issued, the Special Control Board shall complete the assessment of the actual state of the credit institution, even if the credit institution fails to complete the self-assessment specified in Clause 2 of this Article.

4. For people’s credit funds, the time limits specified in Clauses 2 and 3 of this Article shall be counted from the date the State Bank issues a decision on establishment of the Special Control Board.

5. The assessment of the actual state of the credit institution specified in Clauses 2 and 3 of this Article, except credit institutions being people’s credit funds, must
be based on the results of audit by the independent audit institution specified in Clause 1 of this Article.

6. The contents of assessment of the actual state of the credit institution specified in Clauses 2 and 3 of this Article shall be decided by the Special Control Board and a decision thereon shall be sent to the credit institution, covering the following major contents:

a/ Organization, governance and administration;

b/ Information technology system;

c/ Banking activities and other business activities, including also accumulated interests and losses of the credit institution.

7. The Special Control Board shall, based on the result of its assessment of the actual state of the credit institution, request in writing the credit institution to propose and formulate a restructuring plan in accordance with this Law.

8. Expenses for hiring an independent audit institution and other expenses related to the assessment of the actual state of the credit institution shall be paid by such credit institution and accounted as its expenditures.

9. The time limits specified in Clauses 1, 2, 3 and 4 of this Article may be extended by the State Bank for at most two times the original time limits.

Article 168. Termination of special control

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

1. The credit institution has overcome the situation that results in the special control and complies with the prudential ratios specified in Article 138 of this Law;

2. The credit institution has completed the recovery plan, or the plan on merger, consolidation, or transfer of all shares or capital contributions, or the mandatory transfer plan approved under Section 2, 3 or 4 of this Chapter;

3. The credit institution is dissolved, merged or consolidated under Section 5 of this Chapter, Chapter XIII of this Law and other relevant laws;

4. The judge has appointed an asset management officer or an asset management and liquidation enterprise to carry out the bankruptcy procedures for the credit institution.

Section 2

PLANS ON RECOVERY OF CREDIT INSTITUTIONS PLACED UNDER SPECIAL CONTROL

Article 169. Formulation and approval of recovery plans

1. Within 60 days after receiving a written request from the Special Control Board of as specified in Clause 7, Article 167 of this Law, a credit institution placed under special control shall complete the formulation of a recovery plan and submit it to the Special Control Board.

2. Within 30 days after receiving the recovery plan from the credit institution placed under special control, the Special Control Board shall assess and report on the feasibility of the plan to the State Bank.

The feasibility of the recovery plan of a people’s credit funds shall be assessed by the Special Control Board, in coordination with the deposit insurer and the concerned cooperative bank.

3. The State Bank shall consider and approve the recovery plan within 60 days after receiving the report from the Special Control Board under Clause 2 of this Article or within 60 days after the Prime Minister decides on grant of a special loan specified in Clause 4 of this Article. In case of disapproval, the State Bank shall send a written notice to the credit institution and the Special Control Board.

4. In case the recovery plan proposes the grant of unsecured interest-free special loans by the State Bank, the State Bank shall report thereon to the Prime Minister for the latter to consider and decide on the grant of unsecured interest-free special loans before approving the recovery plan.

5. The time limits specified in Clauses 1, 2 and 3 of this Article may be extended by the State Bank for at most two times such time limits.

Article 170. Contents of recovery plans

1. A recovery plan must have the following major contents:

a/ A plan and time limit for increase of the charter capital in case the actual value of the charter capital is smaller than the legal capital; the capital adequacy ratio falls below the level specified by the State Bank Governor; or it is requested by the State Bank to ensure the operation safety of the concerned credit institution;

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

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

d/ A plan on settlement of financial shortcomings and weaknesses, non-performing loans, collaterals and other measures to remediate violations;

dd/ A plan on phased repayment of deposits of legal-entity customers and deposits and loans of other credit institutions; and a plan on settlement of borrowed special loans (if any) including those specified in Clause 3, Article 162 of this Law;

e/ The support measures specified in Article 171 of this Law that need to be applied;

g/ A roadmap and time limit for implementation of the recovery plan.

2. In case of being supported by another credit institution, in addition to the contents specified in Clause 1 of this Article, the credit institution placed under special control shall coordinate with the supporting credit institution in adding to the recovery plan the following contents:

a/ Information about the credit institution supporting the implementation of the recovery plan;

b/ The supporting credit institution’s plan on provision of support for the credit institution placed under special control; a plan on provision of support for the supporting credit institution;

c/ A plan on payment of remunerations, salaries, bonuses and other benefits for the personnel seconded to participate in the governance, administration and control of the credit institution placed under special control;

d/ A plan on payment of salaries to employees of the credit institution placed under special control during the special control period.

Article 171. Support measures for implementation of recovery plans

1. For a credit institution placed under special control being a commercial bank, cooperative bank or finance company, one or more than one of the following support measures shall apply:

a/ To borrow special loans from the State Bank, the deposit insurer, or other credit institutions under Point b, Clause 1, and Clause 2, Article 192 of this Law;

b/ To enjoy exemption from interests on refinancing loans and special loans provided by the State Bank;

c/ To receive deposits or borrow loans from the supporting credit institution(s) with preferential interest rates;

d/ To purchase debts and corporate bonds held by the supporting credit institution(s) which are classified into the standard group; to sell such debts and corporate bonds back to the supporting credit institution(s);

dd/ To reach agreement with, and select, one or more than one of the supporting credit institution(s) to participate in implementing its recovery plan;

e/ To receive support from the supporting credit institution(s) in the form of appointing personnel to participate in governance and administration work and in information technology;

g/ To allocate receivable interests to be written off, if any, based on its financial capacity, adhering to the principle that the total amount of receivable interests to be written off and the provision to be set up must equal the revenue-expense difference based on its business results. The duration for allocation of receivable interests to be written off is at most 10 years after obtaining the State Bank’s approval and such regulation shall only apply to receivables incurred by the time the credit institution is placed under special control;

h/ When implementing the solution of increasing the charter capital under the recovery plan, shareholders/capital contributors may hold shares/capital contributions in excess of the holding limits specified in Articles 63 and 77 of this Law. These shareholders/capital contributors shall formulate a roadmap for reduction of their holding rate so as to comply with the specified limits;

i/ Other measures according to the State Bank’s competence.

2. For credit institutions placed under special control that are people’s credit funds or microfinance institutions, one or more than one of the following support measures shall apply:

a/ The measures specified at Points b, c, d, dd, e, g and i, Clause 1 of this Article;

b/ To borrow special loans from the State Bank, deposit insurer and other credit institutions under Point b, Clauses 1 and 2, Article 192 of this Law, for microfinance institutions;

c/ To borrow special loans from cooperative banks from the source of the people’s credit fund system safety assurance fund with the most preferential interest rate of 0%/year, for people’s credit funds.

Article 172. Implementation of recovery plans

1. Credit institutions placed under special control shall implement approved recovery plans.

2. The Special Control Boards shall inspect and supervise credit institutions placed under special control in implementation of the approved recovery plan.

3. The State Bank shall decide on the modification and supplementation of the recovery plans of credit institutions placed under special control, including also the extension of the time limit for implementation of the recovery plans at the request of the Special Control Boards of such credit institutions.

4. In case of adjusting or adding to the recovery plans the measure of granting unsecured interest-free special loan, the State Bank shall report thereon to the Prime Minister for consideration and decision.

5. In case the recovery plan of a credit institution placed under special control is not approved under Clause 3, Article 169 of this Law, or the credit institution cannot recover according to the approved recovery plan or fails to overcome the situation that results in the special control by the deadline for implementation of the recovery plan, the Special Control Board shall request the credit institution to propose and formulate a plan on mandatory transfer of commercial bank, or dissolution plan or bankruptcy plan in accordance with this Law.

Article 173. Requirements for supporting credit institutions

A supporting credit institution must fully satisfy the following conditions:

1. It has been operating at a profit as shown in its independently audited financial statements for at least 2 consecutive years preceding the year of providing support;

2. It complies with the prudential ratios specified in Article 138 of this Law;

3. The number of members and composition of its Members’ Council/Board of Directors and Supervisory Board comply with law;

4. Its internal control system and internal audit system comply with Articles 57 and 58 of this Law.

Article 174. Rights and obligations of a supporting credit institution

1. To coordinate with the credit institution placed under special control in developing a recovery plan specified in Clause 1, Article 169 of this Law.

2. To select, nominate and second capable, experienced and qualified personnel to participate in the governance, administration and control of the credit institution placed under special control according to the State Bank’s written request.

3. To implement, manage and supervise the organization and operation of the credit institution placed under special control according to the approved recovery plan; to propose modifications and supplementations to the approved recovery plan to the Special Control Board.

4. To lend and make deposits with preferential interest rates at the credit institution placed under special control according to the approved recovery plan.

5. To sell debts and corporate bonds that are classified into the standard group to the credit institution placed under special control according to the State Bank’s written request.

6. To redeem debts and corporate bonds sold under Clause 5 of this Article according to the State Bank’s written request.

7. To borrow a refinancing loan with the interest rate equal to that of the loan or deposit it grants to, or makes at, the credit institution placed under special control; the amount and period of the refinancing loan must not exceed the amount and period of the loan or deposit it grants to, or makes at, the credit institution placed under special control; to reduce the required reserves ratio by 50%.

8. Not to be subject to restrictions on purchase, holding and investment in government bonds and government-guaranteed bonds specified at Point d, Clause 1, Article 138 of this Law.

9. To apply the risk coefficient of 0% to the loan or deposit it grants to, or makes at, the credit institution placed under special control when calculating the capital adequacy ratio and classify them into the standard group.

10. To account into its operating expenses remunerations, salaries and bonuses for personnel seconded to participate in the governance, administration and control of the credit institution placed under special control.

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

Section 3

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

Article 175. Merger, consolidation, and transfer of all shares or capital contributions of credit institutions placed under special control

The merger, consolidation, and transfer of all shares or capital contributions of a credit institution placed under special control shall be carried out if the following conditions are fully satisfied:

1. The credit institution to which the credit institution placed under special control is merged or consolidated or the investor that acquires all shares or capital contributions of the credit institution meets the conditions specified by law;

2. The actual value of the charter capital of the credit institution after the merger or consolidation at least equals the legal capital and such credit institution meets conditions on prudential ratios specified in Article 138 of this Law.

Article 176. Formulation and approval of plans on merger, consolidation, or transfer of all shares or capital contributions

1. A credit institution placed under special control shall, within 60 days after receiving the Special Control Board’s written request specified in Clause 7, Article 167 of this Law, complete the formulation of a plan on merger, consolidation, or transfer of all shares or capital contributions and submit it to the Special Control Board.

2. The procedures and time limit for approval of a plan on merger, consolidation, or transfer of all shares or capital contributions must comply with Clauses 2, 3 and 5, Article 169 of this Law.

Article 177. Contents of plans on merger, consolidation, or transfer of all shares or capital contributions

1. The plan on merger, consolidation, or transfer of all shares or capital contributions of a credit institution placed under special control must have the following major contents:

a/ Title of the plan and its implementation process;

b/ Information about the merged credit institution and merging credit institution, the consolidated credit institution or the investor acquiring all shares or capital contributions, including information proving its/their capacity and eligibility in accordance with law;

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

d/ A business operation plan for the period of 3 years after the merger, consolidation, or transfer of all shares or capital contributions, including also tentative prudential ratios specified in Article 138 of this Law;

dd/ A plan on settlement of the borrowed special loans, including also those specified in Clause 3, Article 162 of this Law;

e/ A plan on remediation of the situation that results in the special control in case of transfer of all shares or capital contributions;

 g/ The support measures specified in Article 171 of this Law, except those specified at Point a, Clause 1, and Points b and c, Clause 2, Article 171 of this Law;

h/ A roadmap and time limit for implementation of the plan.

2. The holding rate of the investor acquiring all shares or capital contributions must comply with the rate specified in the approved plan on transfer of all shares or capital contributions and may exceed the maximum holding rate specified in Clauses 2 and 3, Article 63, Clause 1, Article 77, and Clause 2, Article 137, of this Law but the investor shall formulate a roadmap for reduction of its holding rate so as to comply with the specified limits.

Article 178. Implementation of plans on merger, consolidation, or transfer of all shares or capital contributions

1. Credit institutions placed under special control shall implement approved plans on merger, consolidation or transfer of all shares or capital contributions.

2. The Special Control Board shall inspect and supervise a credit institution placed under special control in the implementation of the approved plan on merger, consolidation, or transfer of all shares or capital contributions.

3. The State Bank shall inspect and supervise the implementation of approved plans on merger, consolidation, or transfer of all shares or capital contributions.

4. The State Bank shall decide on the modification and supplementation of plans on merger, consolidation, or transfer of all shares or capital contributions, including also the extension of the time limit for implementation of the plans as requested by Special Control Board.

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

6. In case the plan on merger, consolidation, or transfer of all shares or capital contributions of a credit institution is not approved by the State Bank or the credit institution placed under special control fails to implement such plan by its deadline, the Special Control Board shall request the credit institution to propose and formulate a mandatory transfer plan, for commercial banks, or dissolution plan or bankruptcy plan in accordance with this Law.

Section 4

PLANS ON MANDATORY TRANSFER OF COMMERCIAL BANKS PLACED UNDER SPECIAL CONTROL

Article 179. Formulation and approval of plans on mandatory transfer of commercial banks placed under special control in case there is a written request from the mandatory transferee

1. The mandatory transfer of a commercial bank placed under special control shall be carried out when the following conditions are fully met:

a/ The commercial bank’s accumulated loss exceeds 100% of the value of its charter capital and reserve funds written in its audited latest financial statement;

b/ Within 60 days after the commercial bank receives the Special Control Board’s written request under Clause 7, Article 167; or Clause 5, Article 172; or Clause 6, Article 178 of this Law, there is a party that meets the conditions specified in Article 184 of this Law filing a request for acquisition of the commercial bank through mandatory transfer.

2. Within 180 days after the commercial bank receives the Special Control Board’s written request under Clause 7, Article 167; or Clause 5, Article 172; or Clause 6, Article 178 of this Law, the mandatory transferee must complete the mandatory transfer plan and submit it to the Special Control Board.

3. Within 30 days after receiving the mandatory transfer plan from the expected mandatory transferee, the Special Control Board shall assess the plan and submit a report on the feasibility of the plan to the State Bank.

4. After receiving the report from the Special Control Board, the State Bank shall consider approving the plan on mandatory transfer of the commercial bank placed under special control.

5. In case the mandatory transfer plan proposes the measure of granting unsecured interest-free special loans by the State Bank, the State Bank shall report thereon to the Prime Minister for consideration and decision before approving the mandatory transfer plan.

6. The time limits specified in Clauses 2 and 3 of this Article may be extended by the State Bank for at most two times the original ones.

7. If the mandatory transfer plan is not approved and the commercial bank does not fall into the cases of designation of a mandatory transferee specified in Clause 1, Article 180 of this Law, the State Bank shall request the commercial bank to formulate a bankruptcy plan in accordance with this Law.

Article 180. Formulation and approval of the plan on mandatory transfer of commercial banks placed under special control in case of designation of a mandatory transferee

1. The State Bank shall submit to the Government for designation of the mandatory transferee of a commercial bank placed under special control when the following conditions are fully met:

a/ The commercial bank falls into the case specified at Point a, Clause 1, Article 179 of this Law;

b/ There is no party filing a request for acquisition of the commercial bank through mandatory transfer as specified at Point b, Clause 1, Article 179 of this Law or the mandatory transfer plan is not approved under Clause 4, Article 179 of this Law;

c/ The bankruptcy of the commercial bank placed under special control is likely to threaten the safety of the credit institution system.

2. The designated mandatory transferee must fully meet the conditions specified in Article 184 of this Law.

3. After the Government decides to designate a mandatory transferee, the designated mandatory transferee must, within 180 days after receiving the State Bank’s written request, complete the formulation of a plan on mandatory transfer of the commercial bank.

4. The order and time limit for approving the mandatory transfer plan in case of designating a mandatory transferee must comply with Clauses 3, 4, 5 and 6, Article 179 of this Law.

5. In case of failing to designate a mandatory transferee or the mandatory transfer plan is not approved, the State Bank shall request the commercial bank to formulate a bankruptcy plan in accordance with this Law.

Article 181. Contents of mandatory transfer plans

A mandatory transfer plan must have the following major contents:

1. Information about the mandatory transferee;

2. A plan on increase of the charter capital and deadline therefor;

3. A business operation plan suitable to the actual state of the commercial bank in each period;

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

5. A plan on settlement of shortcomings, weaknesses, non-performing loans and collaterals;

6. A plan on settlement of deposits of legal-entity clients, deposits and loans of other credit institutions; a plan on settlement of borrowed special loans, including also those specified in Clause 3, Article 162 of this Law;

7. A plan on settlement of shares or capital contributions of the mandatory transferee at the commercial bank subject to mandatory transfer, which exceeds the limit specified in Article 186 of this Law;

8. Support measures specified in Article 182 of this Law;

9. A roadmap for compliance with Articles 136, 137 and 138, and Clause 3, Article 144, of this Law;

10. A roadmap and time limit for implementation of the mandatory transfer plan.

Article 182. Support measures for commercial banks subject to mandatory transfer

1. A commercial bank that is subject to mandatory transfer may apply one or more than one of the following measures:

a/ Selling unsecured non-performing loans or secured non-performing loans whose collaterals are distrained or do not have valid dossiers or papers to debt trading and handling organizations;

b/ Receiving deposits or borrowing loans from the mandatory transferee according to the mandatory transfer plan or as agreed;

c/ Purchasing debts or corporate bonds held by the mandatory transferee which are classified into the standard group; selling such debts or corporate bonds back to the mandatory transferee as agreed or in case such debts are converted into non-performing loans;

d/ Receiving support from the mandatory transferee in the form of appointing personnel to participate in governance, administration and control work; in information technology-related activities; and other activities as agreed;

dd/ Enjoying exemption from interest of refinancing and special loans from the State Bank;

e/ Borrowing special loans from the State Bank, the deposit insurer, and other credit institutions under Point b, Clause 1, and Clause 2, Article 192 of this Law;

g/ Other measures according to the State Bank’s competence.

2. The risk coefficient of 0% may be applied to loans granted to, or guaranteed amounts or deposits made at the commercial bank placed under special control by mandatory transferees or other credit institutions when calculating the capital adequacy ratio and classified into the standard group during the time of implementation of the mandatory transfer plan.

Article 183. Organization of implementation of mandatory transfer plans

1. The State Bank shall decide on mandatory transfer and approve mandatory transfer plans.

From the date the State Bank issues a decision on mandatory transfer of a commercial bank, all rights and interests of the owner, capital contributors or shareholders of the commercial bank subject to mandatory transfer shall be terminated.

2. The State Bank shall decide on the recording of decrease in the charter capital of commercial banks subject to mandatory transfer to correspondingly reduce their accumulated loss.

3. The decision on mandatory transfer of a commercial bank must have the following major contents:

a/ Name of the mandatory transferee; name of the commercial bank subject to mandatory transfer before and after the mandatory transfer; and legal form, charter capital, owner, capital contributors or shareholders of the commercial bank subject to mandatory transfer;

b/ Termination of all rights and interests of the owner, capital contributors or shareholders of the commercial bank subject to mandatory transfer;

c/ Responsibilities of the mandatory transferee and the commercial bank subject to mandatory transfer under the approved mandatory transfer plan and in accordance with law.

4. The mandatory transferee shall:

a/ Exercise the rights of the owner, capital contributors or shareholders at the commercial bank subject to mandatory transfer;

b/ Implement the approved mandatory transfer plan.

5. The commercial bank subject to mandatory transfer shall:

a/ Carry out procedures for changing its license;

b/ Implement the approved mandatory transfer plan.

6. When necessary, the State Bank shall decide on the modification and supplementation of the mandatory transfer plan, including also the extension of the time limit for implementation of the plan.

7. In case of adjusting or adding to mandatory transfer plans the measure of granting unsecured interest-free special loans, the State Bank shall report thereon to the Prime Minister for consideration and decision.

8. The State Bank shall inspect and supervise the implementation of the approved mandatory transfer plan.

9. If the commercial bank placed under special control fails to recover from the situation that results in the special control by the deadline for implementation of the mandatory transfer plan, the State Bank shall request the commercial bank to formulate a bankruptcy plan in accordance with this Law.

Article 184. Mandatory transferees

1. Mandatory transferees shall be one more than one of the following organizations:

a/ Domestic or foreign credit institutions;

b/ Domestic and foreign enterprises;

c/ Other organizations.

2. A mandatory transferee that is a domestic credit institution must fully meet the following conditions:

a/ Having been profitably operating for at least 2 consecutive years preceding the year of filing a request for acquisition of, or being designated to acquire, the commercial bank placed under special control through mandatory transfer as stated in its independently audited financial statements;

b/ Meeting the prudential ratios specified in Article 138 of this Law;

c/ Having a feasible mandatory transfer plan.

3. A mandatory transferee that is not a domestic credit institution must fully meet the following conditions:

a/ Being a legal entity;

b/ Satisfying the conditions specified at Points a and c, Clause 2 of this Article;

Article 185. Rights and obligation of mandatory transferees

1. A mandatory transferee that is a credit institution has the following rights and obligations:

a/ To own 100% of the charter capital of the commercial bank subject to mandatory transfer in case such bank is converted into a single-member limited liability company;

b/ To hold capital or shares at the commercial bank subject to mandatory transfer at the rate specified in the approved mandatory transfer plan, which may exceed the holding rates specified in Clauses 2 and 3, Article 63; Clause 1, Article 77; and Clause 2, Article 137, of this Law.

c/ To refrain from consolidating its financial statements with those of the commercial bank subject to mandatory transfer;

d/ To exclude the commercial bank subject to mandatory transfer when calculating the consolidated capital adequacy ratio;

dd/ To exclude the credit extension balance of the commercial bank subject to mandatory transfer when calculating the ratios and limits specified in Clause 4, Article 135, and Clauses 1 and 2, Article 136, of this Law;

e/ To account as its operating expenses remunerations, salaries and bonuses for personnel seconded, designated or appointed to participate in the governance, administration and control of the commercial bank subject to mandatory transfer;

g/ To coordinate with the commercial bank placed under special control in developing a mandatory transfer plan; to organize the implementation and modification and supplementation of the approved mandatory transfer plan;

h/ To select and appoint qualified personnel to participate in the governance, administration and control of the commercial bank subject to mandatory transfer;

i/ To manage and supervise the organization and operation of the commercial bank subject to mandatory transfer;

k/ To grant loans to, and make deposits, at the commercial bank subject to mandatory transfer under the mandatory transfer plan or as agreed;

l/ To sell or sell under forward contracts debts or corporate bonds classified into the standard group to the commercial bank subject to mandatory transfer as agreed; to redeem such debts or corporate bonds in case such debts are converted into non-performing loans;

m/ To be exempt from setting up a provision for investment devaluation for the capital contributed to the commercial bank subject to mandatory transfer and exclude such capital amount when calculating its capital or share holding rate;

n/ To sell or issue shares of the commercial bank subject to mandatory transfer to foreign investors in conformity with the approved mandatory transfer plan;

o/ To borrow a refinancing loan with the interest rate equal to that of the loan or deposit it grants to, or makes at, the commercial bank subject to mandatory transfer; the amount and period of the refinancing loan must not exceed the amount and period of the loan or deposit it grants to, or makes at, the commercial bank subject to mandatory transfer;

p/ To reduce the required reserve ratio by 50%;

q/ To be exempt from restrictions on the rates of purchase, holding and investment in government bonds and government-guaranteed bonds under Point d, Clause 1, Article 138 of this Law;

r/ To issue long-term bonds to the deposit insurer according to the State Bank’s decision;

s/ To take other measures as decided by the State Bank according to its competence.

2. A mandatory transferee that is not a credit institution has the rights and obligations specified at Points a, b, c, e, g, h, i, m and n, Clause 1 of this Article and may make deposits at the commercial bank subject to mandatory transfer under the mandatory transfer plan or as agreed.

Article 186. Handling of shares and capital contributions in excess of the prescribed limits

1. A mandatory transferee must reduce its share or capital holding rate at the commercial bank subject to mandatory transfer by increasing the bank’s charter capital, transferring its shares or capital contributions to new investors, and other measures in accordance with law so as to ensure the compliance with the limits specified in Clauses 2 and 3, Article 63; Clause 1, Article 77; and Clause 2, Article 137, of this Law within the time limit specified in the mandatory transfer plan.

2. In case of failing to comply with Clause 1 of this Article, the mandatory transferee shall proceed with the merger, consolidation or dissolution of the commercial bank subject to mandatory transfer.

3. The handling of shares or capital contributions specified in Clause 1 of this Article shall be carried out before the deadline specified in the approved mandatory transfer plan when the following conditions are fully met:

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

b/ It has been at least 1 year since the mandatory transfer decision takes effect.

Section 5

DISSOLUTION AND BANKRUPTCY OF CREDIT INSTITUTIONS PLACED UNDER SPECIAL CONTROL

Article 187. Dissolution of credit institutions placed under special control

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

a/ It is capable of repaying all of its debts;

b/ There is a credit institution taking over all of its loan liabilities.

2. In case of dissolution under Point a, Clause 1 of this Article, the Special Control Board shall propose the State Bank to decide on the dissolution of the credit institution placed under special control.

3. In case of dissolution under Point b, Clause 1 of this Article, the Special Control Board shall request the credit institution placed under special control to coordinate with the credit institution that takes over all of its loan liabilities in formulating and submitting to the State Bank for approval an asset liquidation plan, covering the plan on purchase of part or all of assets of, concurrently with taking over all loan liabilities from, the credit institution placed under special control, and support measures for the credit institution taking over all loan liabilities.

For a people’s credit fund, it is required to seek opinions of the concerned cooperative bank on the asset liquidation plan before such plan is submitted to the State Bank.

4. The credit institution taking over all loan liabilities must fully satisfy the following conditions:

a/ Having been operating at a profit for at least 2 consecutive years preceding the year of taking over all loan liabilities as shown in its independently audited financial statement;

b/ Satisfying the prudential ratio specified in Clause 1, Article 138 of this Law at the time of taking over all loan liabilities.

5. The dissolution and liquidation of assets of the credit institution placed under special control upon dissolution must comply with Clause 1, Article 204 of this Law and other relevant laws.

Article 188. Bankruptcy of credit institutions placed under special control

1. The bankruptcy plan of a credit institution placed under special control shall be formulated in one of the following cases:

a/ The credit institution placed under special control fails to formulate a restructuring plan within the time limit specified in Clause 1, Article 169; and Clause 1, Article 176, of this Law, and is ineligible for mandatory transfer as specified in Clause 1, Article 179; and Clause 1, Article 180, of this Law, or for dissolution as specified in Clause 1, Article 187 of this Law;

b/ The commercial bank falls into the cases specified in Clause 7, Article 179; Clause 5, Article 180; or Clause 9, Article 193, of this Law;

c/ The credit institution falls into the case specified in Clause 2, Article 204 of this Law;

d/ The credit institution placed under special control proposes a bankruptcy plan within 60 days after receiving the Special Control Board’s written request as specified in Clause 7, Article 167; Clause 5, Article 172; or Clause 6, Article 178, of this Law.

2. The Special Control Board shall coordinate with the credit institution placed under special control and the deposit insurer in formulating a bankruptcy plan of the credit institution and report such plan to the State Bank for submission to the Government for approval, except the case specified in Clause 3 of this Article.

After the bankruptcy plan is approved, the State Bank shall propose the Prime Minister to decide on the deposit insurance payout limits for depositors, which must not exceed their deposits at the credit institution.

3. In case the credit institution placed under special control is a people’s credit fund, the Special Control Board shall coordinate with the people’s credit fund, deposit insurer and concerned cooperative bank in developing a bankruptcy plan of the people’s credit fund and report it to the State Bank for submission to the Prime Minister for decision on the limits of deposit insurance payouts for depositors, which must not exceed their deposits at the people’s credit fund.

After the Prime Minister decides on the limits of deposit insurance payouts, the Special Control Board shall cooperate with the people’s credit fund placed under special control, the deposit insurer and the cooperative bank to complete the bankruptcy plan of the people’s credit fund placed under special control for submission to the State Bank for approval.

Article 189. Contents of bankruptcy plans

A bankruptcy plan must have the following major contents:

1. The actual state of the credit institution placed under special control;

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

3. The estimated deposit insurance payout limits for individual depositors; and the payment roadmap and time limit;

4. A roadmap and responsibilities for implementation of the bankruptcy plan.

Article 190. Organization of implementation of a bankruptcy plan

1. After the bankruptcy plan is approved, the deposit insurer shall coordinate with the credit institution placed under special control in making deposit insurance payouts to depositors under the bankruptcy plan.

2. In case the amount in the operations contingency fund of the deposit insurer is not sufficient to make deposit insurance payouts to depositors under Clause 1 of this Article, the State Bank shall grant a special loan to the deposit insurer.

The deposit insurer shall formulate a plan on increase of the deposit insurance premiums to offset special loans borrowed from the State Bank; and prioritize the repayment for special loans borrowed from the State Bank from the amounts repaid by credit institutions for special loans they borrow from the deposit insurer, revenues from sale of valuable papers held by the deposit insurer, revenues from liquidation of assets of credit institutions borrowing special loans, and deposit insurance premiums.

3. The State Bank shall inspect and supervise the implementation of approved bankruptcy plans, including also the request for credit institutions placed under special control to file a request for courts to open bankruptcy procedures in accordance with the bankruptcy law.

4. When necessary, the State Bank shall decide on modifications or supplements to bankruptcy plans, for people’s credit funds, or submit modifications or supplements to bankruptcy plan to the Government for decision, for other credit institutions.

5. The order and procedures for bankruptcy of credit institutions must comply with Article 203 of this Law and bankruptcy law.

Chapter XI

HANDLING OF CREDIT INSTITUTIONS UNDERGOING MASS WITHDRAWAL; SPECIAL BORROWING AND LENDING

Article 191. Handling of credit institutions undergoing mass withdrawal

1. A credit institution undergoing mass withdrawal shall report thereon to the State Bank and immediately implement the following measures:

a/ Refraining from paying dividends in cash; suspending or restricting credit extension activities and other activities using the credit institution’s funds; applying other solutions to meet the demand for repayment of deposited funds to clients;

b/ Implementing measures specified in the plan on remediation of mass withdrawal specified in Article 143 of this Law; updating and adjusting such plan if necessary.

2. In case a credit institution subject to early intervention undergoes mass withdrawal, it shall report on the state of mass withdrawal to the State Bank, review and re-evaluate the situation so as to formulate and adjust the plan on remediation of mass withdrawal according to Articles 158 and 160 of this Law. The credit institution shall implement the plan on remediation of mass withdrawal as formulated and adjusted.

3. Credit institutions may apply the following support measures when undergoing mass withdrawal:

a/ Selling valuable papers to the State Bank as an open market operation with the interest rate of 0%;

b/ Carrying out foreign currency transactions with the State Bank to ensure liquidity according to the State Bank Governor’s regulations;

c/ Borrowing special loans from the State Bank; borrowing special loans from deposit insurance organizations according to the law on deposit insurance; and borrowing special loans from other credit institutions, for commercial banks, cooperative banks, people’s credit funds, and micro-finance institutions.

Article 192. Cases entitled to borrow special loans

1. A credit institution may borrow special loans from the State Bank and other credit institutions:

a/ To repay deposited funds to depositors according to Article 191 of this Law; or,

b/ To implement the restoration plan or mandatory transfer plan.

2. Commercial banks, cooperative banks, people’s credit funds, and micro-finance institutions may borrow special loans from deposit insurance organizations according to the law on deposit insurance.

3. Cooperative banks shall only grant special loans to people’s credit funds according to the State Bank Governor’s regulations.

Article 193. Competence to decide on grant of special loans, interest rates and collaterals of special loans

1. The State Bank shall decide on the grant of special loans to credit institutions, for special loans that are secured interest-bearing loans. The interest rates on, and collaterals for, the State Bank’s special loans must comply with the State Bank Governor’s regulations.

2. Cooperative banks shall decide on the grant of special loans to people’s credit funds.

3. Deposit insurance organizations and other credit institutions shall decide on the grant of special loans to credit institutions.

4. The Prime Minister shall decide on the grant of special loans by the State Bank to credit institutions, for special loans that are interest-free loans or unsecured loans based on the State Bank’s proposal.

Article 194. Principles for handling of special loans

1. Special loans shall be repaid prior to all other loans and financial liabilities of special loan-borrowing parties, including also secured loans loans and financial liabilities.

2. Cooperative banks may account irrecoverable special loans as reduction in the Fund for assurance of safety for the system of people’s credit funds.

3. The State Bank Governor shall specify the grant of special loans.

Chapter XII

HANDLING OF NON-PERFORMING LOANS AND COLLATERALS

Article 195. Non-performing loans

Non-performing loans regulated in this Chapter include:

1. Non-performing loans of credit institutions and foreign bank branches, including non-performing loans accounted on the balance sheet according to the State Bank Governor’s regulations, non-performing loans which have been handled using risk provisions but yet to be recovered and are being monitored out of the balance sheet;

2. Non-performing loans that debt trading and handling organizations have purchased from credit institutions and foreign bank branches but have yet to recover.

Article 196. Sale of non-performing loans and collaterals thereof

Credit institutions, foreign bank branches and debt trading and handling organizations shall sell non-performing loans and collaterals thereof in a public and transparent manner in accordance with law. The selling price of a non-performing loan and collateral thereof may be higher or lower than the principal balance of the non-performing loan.

Article 197. Purchase and sale of non-performing loans by debt trading and handling organizations

1. Debt trading and handling organizations may purchase non-performing loans of credit institutions at market prices or by special bonds and convert non-performing loans purchased with special bonds into non-performing loans purchased at market prices according to the State Bank Governor’s regulations. Debt trading and handling organizations may only purchase non-performing loans of joint-venture credit institutions, wholly foreign-owned credit institutions and foreign bank branches at market prices.

2. Debt trading and handling organizations may sell non-performing loans to legal entities and individuals.

3. Debt trading and handling organizations may negotiate with credit institutions on distribution of the remainder of proceeds from recovery of non-performing loans after subtracting purchase prices and handling expenses.

Article 198. Purchase and sale of non-performing loans with collaterals being land use rights, land-attached assets or future land-attached assets

1. The purchaser of loans originating from credit institutions’ or foreign bank branches’ non-performing loans with collaterals being land use rights, land-attached assets or future land-attached asset may hold mortgage or register mortgage of land use rights, land-attached assets or future land-attached assets that are collaterals for the purchased loans.

2. The purchaser of loans originating from credit institutions’ or foreign bank branches’ non-performing loans with collaterals being land use rights, land-attached assets or future land-attached assets may take over the mortgagee’s rights and obligations.

3. Debt trading and handling organizations may register mortgage when receiving additional collaterals for purchased loans that are land use rights, land-attached assets or future land-attached assets.

4. The registration of land information changes for collaterals of loans originating from credit institutions’ or foreign bank branches’ non-performing loans that are land use rights and land-attached assets; registration of mortgage for land use rights, land-attached assets or future land-attached assets that are collaterals of loans originating from credit institutions’ or foreign bank branches’ non-performing loans must comply with the Government’s regulations.

Article 199. Order of payment priority when handling collaterals of non-performing loans

1. The proceeds from the handling of collaterals of non-performing loans shall be divided in the following order of priority:

a/ Expenses for preservation of collaterals;

b/ Expenses for seizure and handling of collaterals;

c/ Court charges under judgments and rulings related to the handling of collaterals;

d/ Taxes and fees directly related to transfer of collaterals, including personal income tax and registration fee;

dd/ Secured loan liabilities for credit institutions, foreign bank branches, and debt trading and handling organizations;

e/ Other unsecured liabilities in accordance with law.

2. In case an asset is used to secure more than one liability, the order of payment priority among the secured parties must comply with the civil law and other relevant laws.

Article 200. Transfer of collaterals

1. Agencies competent to register property ownership and use rights shall carry out procedures for transfer of property ownership or use rights to the purchaser or transferee of collaterals of non-performing loans of credit institutions or foreign bank branches.

2. Except court charges, taxes, and fees directly related to the transfer of collaterals of non-performing loans specified in Article 199 of this Law, the secured party and transferee shall not be required to, on behalf of the securing party, pay or perform other tax, fee and charge obligations arising from the proceeds from the transfer of collaterals of non-performing loans when carrying out the procedures for registration and change of the ownership or use rights over the collaterals. Tax payment by the securing party and the transferee related to the transfer of collaterals of non-performing loans must comply with the tax laws.

3. Credit institutions, foreign bank branches, debt management and asset exploitation companies of credit institutions established and operating under the law on credit institutions and the Vietnam Asset Management Company may transfer the whole or part of real estate projects being collaterals to recover loans according to regulations on transfer of the whole or part of real estate projects of the Law on Real Estate Business and other relevant laws without having to comply with the Law on Real Estate Business’ provisions regarding conditions on real estate business entities that are applicable to transferors.

Chapter XIII

REORGANIZATION, DISSOLUTION, BANKRUPTCY, LIQUIDATION AND CAPITAL AND ASSET BLOCKAGE

Article 201. Reorganization of credit institutions

1. Credit institutions may be reorganized in the form of division, splitting, consolidation, merger, transformation of the legal form or transformation into non-banking credit institution after obtaining the State Bank’s written approval.

2. The State Bank Governor shall specify conditions, dossiers and procedures for approving the reorganization of credit institutions.

Article 202. Cases of dissolution and termination of operation of credit institutions or foreign bank branches

1. Upon expiration of their operation duration, credit institutions and foreign bank branches do not apply for extension or apply for extension but do not obtain written approval by the State Bank.

2. Credit institutions and foreign bank branches have their licenses revoked.

3. Credit institutions and foreign bank branches dissolve on a voluntary basis, provided they are able to repay all debts and obtain the State Bank’s written approval.

4. Credit institutions subject to early intervention or special control have all loan liabilities taken over by credit institutions.

Article 203. Bankruptcy of credit institutions

1. After the State Bank issues a document on termination of special control or non-application of solvency restoration measures or termination of application of solvency restoration measures, if the concerned credit institution remains in the state of insolvency, it shall file an application to request the court to open bankruptcy procedures in accordance with the bankruptcy law.

2. Upon accepting a credit institution’s application for opening of bankruptcy procedures, the court shall immediately apply procedures for liquidating the credit institution’s assets in accordance with the bankruptcy law.

3. After the judge appoints an asset management officer or a business to manage and liquidate assets, the State Bank shall revoke the license of the credit institution.

Article 204. Liquidation of assets of credit institutions and foreign bank branches in case of dissolution or termination of operation

1. In case of dissolution or termination of operation under Article 202 of this Law, a credit institution or foreign bank branch shall liquidate its assets under the State Bank’s supervision and follow the order and procedures for asset liquidation prescribed by the State Bank Governor.

2. In the process of supervising the liquidation of assets of a dissolved credit institution, if detecting that the credit institution is unable to repay all debts, the State Bank shall issue a decision on termination of asset liquidation and request the credit institution to implement its bankruptcy plan under Section 5, Chapter X and Article 203 of this Law.

3. Credit institutions and foreign bank branches that have their assets liquidated shall pay all expenses related to the liquidation of assets.

Article 205. Blockage of capital and assets of foreign bank branches

1. When necessary, in order to protect the interests of depositors, the State Bank shall block part or the whole of capital and assets of a foreign bank branch.

2. The State Bank Governor shall specify cases of blockage and termination of blockage of capital and assets of foreign bank branches.

Chapter XIV

STATE MANAGEMENT

Article 206. Responsibilities of state management agencies

1. The Government shall perform the uniform state management of banking activities throughout the country.

2. The State Bank shall act as the focal agency assisting the Government in uniformly performing the state management of organization and operation of credit institutions, foreign bank branches and foreign representative offices.

3. The Ministry of Finance shall perform the state management of securities and securities market operations and insurance agency operations of credit institutions, foreign bank branches, and subsidiaries and affiliated companies of credit institutions in accordance with the Law on Securities, Law on Insurance Business and other relevant laws.

4. Ministries and ministerial-level agencies shall, within the ambit of their tasks and powers, perform the state management of credit institutions, foreign bank branches and foreign representative offices in accordance with law.

5. People’s Committees at all levels shall perform the state management of credit institutions, foreign bank branches and foreign representative offices operating in their localities in accordance with law.

Article 207. Examining, inspecting and supervising competence

1. The State Bank shall examine, inspect and supervise credit institutions, foreign bank branches and foreign representative offices in accordance with the Law on the State Bank of Vietnam and other relevant laws.

2. The Government Inspectorate shall inspect credit institutions and foreign bank branches in accordance with the law on inspection.

3. The Ministry of Finance has the following responsibilities:

a/ To examine, inspect, and supervise securities and securities market operations of credit institutions, foreign bank branches, and subsidiaries and affiliated companies of credit institutions in accordance with the Law on Securities and other relevant laws;

b/ To inspect and supervise insurance agency operations of credit institutions, foreign bank branches, and subsidiaries and affiliated companies of credit institutions in accordance with the Law on Insurance Business and other relevant laws;

c/ To assume the prime responsibility for, and coordinate and share information with the State Bank when implementing Points a and b of this Clause.

4. Within the ambit of their functions, tasks and powers, ministries and ministerial-level agencies shall examine, inspect and supervise credit institutions, foreign bank branches and foreign representative offices according to their competence.

Article 208. Rights and obligations of entities subject to inspection and supervision

1. To promptly, adequately and accurately provide information and documents at the request of the State Bank and other competent state management agencies during the examination, inspection and supervision process.

2. To take responsibility for the accuracy and truthfulness of the information and documents they provided.

3. To ensure online connectivity and accessibility to data to serve supervision of the State Bank according to the State Bank Governor’s regulations.

4. To report and give explanations for risk and operational safety recommendations and warnings issued by the State Bank.

5. To comply with the State Bank’s risk and operational safety recommendations and warnings.

6. To comply with inspection conclusions and handling decisions of the State Bank, the Government Inspectorate and other agencies in accordance with law.

7. To exercise other rights and perform other obligations in accordance with law.

Chapter XV

IMPLEMENTATION PROVISIONS

Article 209. Effect

1. This Law takes effect on July 1, 2024, except Clause 2 of this Article.

2. Clause 3, Article 200 and Clause 15, Article 210 of this Law takes effect on January 1, 2025.

3. Law No. 47/2010/QH12 on Credit Institutions which has a number of articles amended and supplemented under Law No. 17/2017/QH14 ceases to be effective from the effective date of this Law, except Clauses 1, 2, 3, 4, 8, 9, 12 and 14, Article 210 of this Law.

Article 210. Transitional provisions

1. Credit institutions, foreign bank branches and foreign representative offices already established and operating under licenses granted by the State Bank before the effective date of this Law are not required to apply for re-grant of their licenses under this Law. Modification and supplementation of licenses must comply with this Law.

2. Credit institutions, foreign bank branches and customers may continue to implement contracts, other transactions and agreements signed before the effective date of this Law until they expire. The modification, supplementation and extension of the above-said contracts, other transactions and agreements may be effected only if such modification, supplementation or extension complies with this Law, except cases of debt repayment rescheduling of the contracts, other transactions and credit agreements that must comply with the law on banking.

For indefinite-term contracts, other transactions and agreements that were signed before the effective date of this Law and have contents unconformable with this Law, credit institutions and foreign bank branches and customers may continue to implement such contracts, transactions and agreement by the end of June 30, 2025. After this time, credit institutions, foreign bank branches and customers must terminate or modify or supplement the contracts, other transactions and agreements so as to ensure their conformity with this Law.

3. In case a credit institution subject to special control borrows special loans from the State Bank and, by the effective date of this Law, still has outstanding balance and has not had its restructuring plan approved, the parties may continue to implement the signed special borrowing contracts and be considered for extension of special loans according to the State Bank Governor’s regulations.

4. For issued promissory notes and bills with outstanding balances by the effective date of this Law, credit institutions, foreign bank branches and purchasers may continue to implement with the agreed contents until promissory notes and bills are fully repaid.

5. Credit institutions that contribute capital to, or purchase shares of, enterprises and other credit institutions as specified at Point b, Clause 5, Article 137 of this Law, subsidiaries of credit institutions that contribute capital to, or purchase shares as specified in Clause 5, Article 137 of this Law before the effective date of this Law, and shareholders, or shareholders and their related persons of commercial banks that own shares in excess of the shareholding rate specified in Article 55 of Law No. 47/2010/QH12 on Credit Institutions, which has a number of articles amended and supplemented under Law No. 17/2017/QH14, shall draw up and implement a roadmap so as to ensure compliance with this Law according to the State Bank Governor’s regulations.

6. In case real estate projects that are collaterals of non-performing loans have been seized according to Article 7 of Resolution No. 42/2017/QH14 on pilot handling of non-performing loans of credit institutions (below referred to as Resolution No. 42/2017/QH14) or procedures for transfer thereof have been carried out according to Article 10 of Resolution No. 42/2017/QH14 before the effective date of this Law but, by the effective date of this Law, not been completely handled, Article 10 of Resolution No. 42/2017/QH14 may continue to be applied from January 1, 2024, until the handling is completed.

7. For accrued interests on non-performing loans of credit institutions that have been recorded but yet to be written off according to regulations and the difference between the book value of loans accounted on the balance sheet and the selling price of such loans plus the specific provision amounts made for them currently allocated under Article 16 of Resolution No. 42/2017/QH14, Article 16 of Resolution No. 42/2017/QH14 shall be further applied from January 1, 2024, till the end of August 14, 2027.

8. 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 do not meet the conditions prescribed in Articles 41, 42 and 43 of this Law may continue to hold their posts until their term of office or the period of holding the elected or appointed posts expires.

Boards of Directors of credit institutions that are elected before the effective date of this Law but do not meet the conditions prescribed in Clauses 1 and 3, Article 69 of this Law may continue to operate until their term of office expires.

By the effective date of this Law, Members’ Councils of credit institutions being single-member limited liability companies whose number of members exceeds the number specified at Point a, Clause 1, Article 73 of this Law must adjust the number of members so as to ensure compliance with Point a, Clause 1, Article 73 of this Law before July 1, 2025.

By the effective date of this Law, Supervisory Boards of commercial banks whose number of members does not comply with Clause 2, Article 51 of this Law may continue to maintain the number of members as specified in Clause 2, Article 44 of Law No. 47/2010/QH12 on Credit Institutions, which has a number of articles amended and supplemented under Law No. 17/2017/QH14, until their term of office expires, unless commercial banks elect or appoint additional or substitute members to the Supervisory Boards.

9. For credit institutions which are subject to special control and do not fall into the cases specified in Clause 10 of this Article and for which the restructuring policy is decided before the effective date of this Law, the adjustment of the restructuring policy, formulation and approval of restructuring plans must comply with Sections 1, 1b, 1c, 1d, 1dd and 1e, Chapter VIII of Law No. 47/2010/QH12 on Credit Institutions, which has a number of articles amended and supplemented under Law No. 17/2017/QH14, on adjustment of policies, formulation and approval of plans.

Restructuring plans of credit institutions subject to special control which are approved before the effective date of this Law may continue to be implemented as approved. The amendment and supplementation of approved restructuring plans must comply with this Law.

10. For credit institutions that have their licenses revoked or do not carry out any banking activities for 12 consecutive months prior to the effective date of this Law, the following regulations shall apply:

a/ Credit institutions subject to dissolution under Article 202 of this Law shall proceed with dissolution procedures in accordance with this Law and other relevant laws;

b/ Credit institutions not subject to dissolution under Article 202 of this Law shall proceed with bankruptcy procedures in accordance with Article 203 of this Law and other relevant laws.

11. From the effective date of this Law, shareholders, or shareholders and their related persons that own shares in excess of the shareholding rate specified in Article 63 of this Law may continue to keep their shares but may not increase the volume of their shares until they comply with the regulations on shareholding rate as specified in this Law, except cases of receiving shares as dividends.​

In case the maximum shareholding rate of a major shareholder or a shareholder and its/his/her related persons at a commercial bank performing national defense tasks exceeds the shareholding rate specified in Article 63 of this Law before the effective date of this Law, the shareholder or shareholder and its/his/her related persons may continue to maintain the shareholding rate in conformity with under Clauses 2, 3 and 4, Article 55 of Law No. 47/2010/QH12 on Credit Institutions, which has a number of articles amended and supplemented under Law No. 17/2017/QH14.

12. Credit institutions that are implementing restructuring plans decided by competent authorities before the effective date of this Law may continue to implement these plans until the plans are completed, except the cases specified in Clause 9 of this Article.

13. Microfinance programs and projects of socio-political organizations and non-governmental organizations that are being implemented before the effective date of this Law shall not be required to adjust organization and operation under this Law but must comply with the Government’s regulations.

14. Credit institutions and foreign bank branches that have been licensed to perform the operations of factoring and letter of credit before the effective date of this Law may perform the operations specified at Points dd and e, Clause 3, Article 107; Point e, Clause 1, Article 114; Clause 6, Article 115; Point dd, Clause 1, Article 119; Point a, Clause 1, Article 120; and Point g, Clause 1, Article 124, of this Law without having to modify or supplement their licenses.

15. Credit institutions, foreign bank branches, debt management and asset exploitation companies of credit institutions established and operating under the law on credit institutions, and the Vietnam Asset Management Corporation may transfer the whole or part of real estate projects they have accepted as collaterals for loans before the effective date of this Law to recover such loans without having to comply with the law on real estate business’s provisions on conditions of real estate business entities applicable to real estate project transferors but must meet the following conditions:

a/ The transferred real estate projects must meet the conditions specified at Points a, d, dd, g and h, Clause 1, Article 40 of Law No. 29/2023/QH15 on Real Estate Business and must have land allocation or land lease decisions issued by competent state agencies;

b/ The project transferees must meet the conditions specified in Clauses 2, 4 and 5, Article 40 of Law No. 29/2023/QH15 on Real Estate Business.

This Law was passed on January 18, 2024, by the 15^th National Assembly of the Socialist Republic of Vietnam at its extraordinary 5^th session.-

Chairman of the National Assembly
VUONG DINH HUE