Tuesday, 10/20/2020
Dao & Brothers Law Firm | Add: No. 369, Nguyen Trai, Thanh Xuan, Ha Noi | Tel : (+84-24)3.557.9568*  Fax: (+84-24)3.557.9598 * Hotline: 0945.490.123

Circular No. 40/2011/TT-NHNN dated December 15, 2011 of the State Bank of Vietnam regulating on licensing and organizations, operations of commercial banks, foreign bank branches, representative offices of foreign credit institutions and other foreign or

E-mail Print PDF

THE STATE BANK OF
VIETNAM

------------------

No.: 40/2011/TT-NHNN

SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness

-----------------

Hanoi, December 15, 2011

 

CIRCULAR 

REGULATING ON LICENSING AND ORGANIZATIONS, OPERATIONS OF COMMERCIAL BANKS, FOREIGN BANK BRANCHES, REPRESENTATIVE OFFICES OF FOREIGN CREDIT INSTITUTIONS AND OTHER FOREIGN ORGANIZATIONS WITH BANKING OPERATIONS IN VIETNAM

 

 

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

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

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

Pursuant to the Law on Investment No.59/2005/QH11 dated November 29, 2005;

Pursuant to the Decree No.96/2008/ND-CP August 26, 2008 of the Government regulating functions, tasks, powers and organizational structure of the State Bank of Vietnam;

The State Bank of Vietnam (hereinafter referred to as the State Bank) regulating on licensing and organizations, operations of commercial banks, foreign bank branches, representative offices of foreign credit institutions and other foreign organizations with banking operations in Vietnam as follows:

Chapter 1

GENERAL PROVISIONS

Article 1. Scope of governing and application subjects

1. Scope of governing:

This Circular provides for the licensing and some contents of the organization and operation of commercial banks, foreign bank branches, and representative offices of foreign credit institutions, foreign institutions with banking activities in Vietnam.

2. Application subjects include:

a) Commercial banks;

b) Branches of foreign banks;

c) Representative offices of foreign credit institutions, foreign organizations with banking operations in Vietnam (hereinafter referred to as representative offices);

d) Organizations and individuals involved in the establishment, organization and operation of commercial banks, foreign bank branches and representative offices.

Article 2. Interpretation of terms

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

1. Permits include permits for the establishment and operation of commercial banks, permits for the establishment of foreign bank branches, permits for the establishment of representative offices issued by the State Bank. Document of the State Bank of amending and supplementing license is an integral part of the Permit.

2. Commercial banks mean types of banks to be made all banking activities and other business activities in accordance with the Law on Credit Institutions aimed at profit.

3. Joint stock commercial bank means a commercial bank established and organized in the form of joint stock companies.

4. Bank with 100% foreign capital means commercial bank established in Vietnam with 100% charter capital owned by foreign credit institutions; is a legal entity of Vietnam, with headquarters in Vietnam. 100% foreign-owned bank founded, organized in the form of one member limited liability Company with its owner is a foreign bank or a limited liability company with two or more members of which have a foreign bank owns 50% of Charter capital.

5. Joint Venture bank means commercial bank established in Vietnam with capital contributed by Vietnam Party (including one or more banks of Vietnam) and the foreign party (including one or more foreign banks) on the basis of joint venture contract; is a legal entity of Vietnam, with headquarters in Vietnam. Joint venture bank established, organized in the form of limited liability Company with two members or more but not more than 05 members, of which one member and related persons may not own more than 50% of charter capital.

6. Foreign bank branches are dependent units of foreign bank, having no legal status, to be guaranteed to take the responsibility for all obligations and commitments of foreign bank branches in Vietnam by the foreign bank.

7. Representative offices are dependent units of foreign credit institutions, other foreign institutions with banking activities. Representative offices may not conduct business activities in Vietnam.

8. Foreign credit institutions mean credit institutions established abroad under foreign law provisions.

9. Other foreign organizations with banking activities mean the organizations established abroad under foreign law and to be done business, often provided for one or more the following professional service:

a) Receiving deposits;

b) Issuance of credits;

c) Provision of payment services through the accounts.

10. Shareholders of establishment capital contribution mean the organizations, individuals who own at least one share issued by joint-stock commercial banks at the time of its establishment.

11. The founding shareholders mean shareholders of establishment capital contribution to participate in building up, passing, and signing into the first charter of organization and operation of the joint-stock commercial banks.

12. The first General Meeting of Shareholders means the meeting of the founding shareholders and the other shareholders of establishment capital contribution after being approved of principle by the State Bank, is tasked to pass the charter of organization and operation of joint stock commercial bank, elect the titles members of Management Board, members of the first term Inspection Committee and decide on other matters relating to the establishment of joint-stock commercial banks.

13. Limited partners mean Vietnam's banks, foreign banks to contribute capital into joint-venture bank; as foreign credit institutions to contribute capital into the bank with 100% foreign capital.

14. Founding members mean limited partners to participate in formulating, passing and signing in the first charter of organization and operation of the joint-venture banks, banks with 100% foreign capital.

15. Meeting of the first limited partners means the meeting of the founding members and the other limited partners after  being approved of principle by the State Bank, is tasked to pass the charter of organization and operation of the bank, elect the titles members of Members’ Council, members of the first term Inspection Committee and decide on other matters relating to the establishment of joint-stock banks, banks with 100% foreign capital as Limited liability company with two or more members.

16. The owner means the organization wholly owned capital of commercial bank as one member limited liability Company.

17. The parent bank means foreign bank proposing the establishment of branch or having branch in Vietnam.

18. Preparatory committee means a group of persons established by the founding shareholders, members of establishment capital contribution, selected by the owner, the parent bank, on behalf of the founding shareholders, members of establishment capital contribution, the owner, parent bank to implement the works related to the request for permit. The Preparatory committee must have at least 02 members including 01 member as the head.

19. The legal representative of the organization as Management Board’s Chairman, Chairman of the Members’ Council or the General Director (Director) specified in the Charter.

20. Country of origin for a foreign credit institution, other foreign institution with banking activities is the country where the foreign credit institution, other foreign organization with banking activities is established, based its headquarter.

Chapter 2.

REGULATIONS ON LICENSES

Section 1. GENERAL PROVISIONS

Article 3. Competence to decide on issuance and revocation of licenses 

1. State Bank Governor decides on issuance of licenses under the provisions of the Law on Credit Institutions, this Circular and the provisions of relevant laws.

2. The State Bank Governor decides on revocation of licenses granted in the cases specified in Article 28 of the Law on Credit Institutions. Revocation of licenses shall comply with the provisions of the State Bank.

Article 4. Licenses

1. The State Bank shall specify the contents of banking activities, other business activities of commercial banks, foreign bank branches, the operation contents of representative offices in the license issued to each commercial bank, foreign bank branches, representative offices in the form prescribed in Appendix 01 of this Circular.

2. Where the license is lost, torn, burnt or destroyed under any other form, commercial banks, foreign bank branches, representative offices must give written request stating reasons and send by post or directly deliver at the State Bank for considering the issue of copy of license from the original book in accordance with the law regulations.

Within 02 days after receiving the written request, the State Bank re-issues a copy from the original for commercial bank, foreign bank branch, representative office.

3. Commercial banks, foreign bank branches, representative offices use permits under the provisions of Article 27 of the Law on Credit Institutions.

Article 5. The order and procedures for licensing

1. The order and procedures for granting permits of establishment and operation of commercial banks, permits for the establishment of foreign bank branches as follows:
a) The Preparatory Committee makes dossiers requesting for issuance of permits under the provisions of Article 13, 14, clauses 1, 2, 3, Article 15, clauses 1, 2, 3, 4, 5, 6, Article 16, clauses 1, 2 , 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, Article 17 of this Circular and mailed or submitted directly to the State Bank.

Within 60 days from the date of receiving the dossier requesting for issuance of permit, the State Bank shall send written reply to the preparatory committee to confirm that it received complete and valid dossier for consideration and approval in principle. Where the dossier requesting for issuance of permit is incomplete, the State Bank shall send written reply to the Preparatory Committee requesting for additional documents.

b) Within 90 days from the date of sending written confirmation of received complete and valid dossier, the State Bank shall send written approval in principle of the establishment of commercial bank, foreign bank branch. In case of disapproval, the State Bank shall send a written reply to the Preparatory Committee, in which states clearly the reasons of disapproval.

c) Within 60 days from the date of receiving written approval in principle of the establishment of commercial bank, foreign bank branch, the Preparatory Committee sets up additional documents as prescribed in clause 4, Article 15, clause 7 of Article 16, clause 13, Article 17 of this Circular and mailed or submitted directly to the State Bank. Exceeding the above time limit, the State Bank did not receive or received incomplete documents as mentioned above; the written approval in principle is no longer valid.

Within 02 days from the date of receipt of complete additional documents, the State Bank certifies in writing of the receipt of the full documents. Within 30 days from the date of receipt of complete additional documents, the State Bank conducts to license in accordance with provisions. In case of not licensing, the State Bank sends a written reply to the Preparatory Committee, in which states clearly the reasons of not licensing.

2. The order and procedures for licensing the establishment of representative offices as follows:

a) Foreign credit institutions, other foreign institutions with banking activities make dossiers requesting for issuance of permits under the provisions of Article 13, Article 18 of this Circular and mailed or submitted directly to the State Bank.

Within 30 days from the date of receiving the dossier requesting for issuance of permit, the State Bank shall send document to foreign credit institution, foreign institution having banking activities to confirm the receipt of a complete and valid dossier. Where the dossier requesting for issuance of permit is incomplete, invalid as prescribed, the State Bank shall send written reply to the foreign credit institution, other foreign institution having banking activities requesting for additional documents.

b) Within 60 days from the date of sending written confirmation of received complete and valid dossier, the State Bank shall grant permit as prescribed. In case of refusal, the State Bank shall send a written reply to the foreign credit institution, other foreign institution having banking activities, in which states clearly the reasons of refusal.

Article 6. Payment of license granting fees

1. Commercial banks, foreign bank branches, representative offices to be licensed shall pay license granting fees in the State Bank (Transaction Bureau) within 15 days of being licensed.

2. Fee rate is prescribed by the Ministry of Finance on fees and charges of licensing.

Article 7. Business registration, registration for operation

After being licensed, commercial banks, foreign bank branches must conduct business registration; the representative offices must register its operation as prescribed by law.

Article 8. Opening of operation

1. Commercial banks, foreign bank branches, representative offices licensed must conduct operations from the date of opening their operations.

2. For opening their operations, commercial banks, branches of foreign banks licensed must meet the conditions specified in clause 2 of Article 26 of the Law on Credit Institutions.

3. For opening their operations, representative offices shall disclose information under Article 25 of the Law on Credit Institutions.

4. Commercial banks and branches of foreign banks licensed send by mail or submit directly to the State Bank - branches in provinces, cities where commercial banks, foreign bank branches locate their head offices the written notice of the conditions of opening operation specified in clause 2 of this Article for at least 15 days before the expected date of opening their operations.

5. Commercial banks, foreign bank branches, representative offices must open their operations within 12 months from the date of being issued licenses; beyond this deadline without opening operation, the Bank State shall revoke licenses.

Section 2. LICENSING CONDITIONS

Article 9. Conditions for granting permits for the establishment and operation of joint-stock commercial banks

1. The conditions specified clause 1 of Article 20 of the Law on Credit Institutions.

2. Conditions for founding shareholders:

a) Take full responsibility for the legality of contributed capital source;

b) Commit to support joint-stock commercial bank in finance to solve problems in the case of joint-stock commercial bank meeting difficulties of finance or liquidity;

c) Not to be a founding shareholder, owner, founding member, strategic shareholder of other credit institutions;

d) Have at least 02 founding shareholders as organizations;

đ) Within 05 years from the date of being granted license, the founding shareholders must together own at least 50% of charter capital as setting up joint-stock commercial bank, of which the founding shareholders as organizations must together own at least 50% of the total shares of founding shareholders;

e) In addition to the conditions specified in points a, b, c, đ of this clause, founding shareholders as individuals must meet the following conditions:

(i) Being nationality of Vietnam; has full capacity for civil acts in accordance with law provisions;

(ii) Not subjects to those to be prohibited under the provisions of the Enterprise Law;

(iii) Having financial ability to contribute capital to establish joint-stock commercial bank; not to use the entrustment funds, loans from other organizations and individuals to contribute capital;

(iv) As a manager of profitable business enterprise for at least 03 years preceding the year of filing request for a license or having a university degree, post graduate education in speciality of economy or law.

g) In addition to the conditions specified in points a, b, c, đ, of this clause, founding shareholders as organizations must meet the following conditions:

(i) Being established under the law of Vietnam;

(ii) Having the financial ability to contribute capital to establish joint-stock commercial bank and committing not to use entrustment funds, mobilized capital, loans of other organizations, individuals to contribute capital;

(iii) Fulfilling all the obligations of tax and social insurance according to provisions to the time of submission of application for granting permit.

(iv) Having a minimum equity of 500 billion dong in 5 years preceding the year of filing request for a license;

(v) Trading profitably in the 05 years preceding the year of application for granting permit.

(vi) In case of being enterprises operating in business lines with legal capital requirements, it must be ensured equity minus the minimum legal capital by the amount of committed contribution capital according to data from financial statements audited of the year preceding the time of sending dossier requesting for permit;

(vii) In case of being State-owned enterprises, it must be approved by the competent authority in writing for permission to contribute capital to set up joint-stock commercial bank in accordance with law regulations;

(viii) In case of being organizations licensed to establish and operate in the sectors of banking, securities, insurance, it must comply with the capital contribution under the relevant provisions of law;

(ix) In case of being commercial bank:

- With total assets of at least 100,000 billion dong, fully comply with the regulations on risk management and full appropriation as defined at the time of application for issuance of permit and to the time of granting license;

- Not violating the rate on safety assurance in banking activities in accordance with provisions of the State Bank in the year preceding the year of application for granting license and to the time of issuance of permit;

- Complying with the conditions, limit of purchase and holding shares of credit institutions as prescribed in clause 6 of Article 103 of the Law on Credit Institutions;

- Ensuring the safety rate of minimum capital after the capital contribution to establish joint-stock commercial bank.

Article 10. Conditions for granting permits for the establishment and operation of joint venture banks, banks with 100% foreign capital

1. The conditions specified in clause 2 of Article 20 of the Law on Credit Institutions.

2. The conditions for the founding members and owners as foreign credit institutions:

a) Not committing serious violations of regulations on banking activities and other provisions of laws of the country of origin within 05 consecutive years preceding the year of application for issuance of permits and to the time of licensing;

b) Having experience in international activities, to be rated by the international credit rating institutions from stable level or higher that has the ability to implement the financial commitments and normal operation even when the situation , economic conditions change according the unfavorable direction;

c) Having interest in the consecutive 05 years preceding the year of application for issuance of permit and to the time of licensing;

d) Having total assets equivalent to at least 10 billion US dollars by the end of the year preceding the year of application for issuance of permit;

đ) Being assessed by the competent authorities of the country of origin that ensured the safe capital ratio, the other proportion of safe assurance, fully complying with the regulations on risk management and full appropriation according to provisions of the country of origin in the year preceding the year of application for issuance of permit and to the time of licensing;

e) Not being the owner, founding member, strategic shareholder of other credit institutions of Vietnam.

3. Founding member of the joint-venture banks as commercial banks of Vietnam must meet the conditions specified in points a, b, c, g, clause 2 of Article 9 of this Circular.

4. Within 05 years from the date of being granted license, the founding members must jointly own 100% charter capital of joint-venture bank, bank with 100% foreign capital.

Article 11. Conditions for granting permits for the establishment of foreign bank branches

1. The conditions specified in clause 3 of Article 20 of the Law on Credit Institutions.

2. Conditions for the parent banks:

a) Satisfying the conditions stipulated in points a, b, c, đ, clause 2 of Article 10 of this Circular;

b) The parent bank has total assets at least equivalent to U.S. $ 20 billion in the year preceding the year of of application for issuance of permit and to the time of licensing.

Article 12. Conditions for granting permits for the establishment of representative offices

1. The conditions specified in clause 4 of Article 20 of the Law on Credit Institutions.

2. Representative office head has adequate capacity for bearing civil liability in accordance with the laws of Vietnam, not subject to those banned from corporate governance under the provisions of the Enterprise Law, not concurrently be the General Director (Director) of branches of foreign banks in Vietnam.

Section 3. DOSSIERS REQUESTING FOR LICENSING

Article 13. The principles of making dossiers

1. The documents in the dossier requesting for granting permits of establishment and operation of commercial banks, dossiers requesting for granting permits of the establishment of foreign bank branches must be signed by the heads of the Preparatory Committees, except for otherwise provided for in this Circular. The documents signed by the heads of the Preparatory Committee shall be entitled "prepared by preparatory committee and name the commercial banks, foreign bank branches."

Dossiers of application for permits to establish representative offices must be signed by the legal representatives of foreign credit institutions, other foreign institutions having banking activities, except for otherwise provided for in this Circular.

2. Dossier of application for permit to establish and operate joint stock commercial bank is made in 01 original set in Vietnamese.

3. Dossiers of application for permits to establish and operate joint-venture banks, banks with 100% foreign capital, dossiers of application for permits to establish branches of foreign banks, dossiers of application for permits to establish representative offices shall be made in 02 original sets including 01 set in Vietnamese and one in English, in which:

a) The set of dossier in English must be legalized by consular as prescribed by law, except for the following documents:

(I) Documents from the competent authorities of the country of origin sent directly to the State Bank;

(ii) The financial statements made directly in English.

b) The translations from English into Vietnamese must be certified the translator's signature according to provisions on the certification of the law of Vietnam;

c) Translations of the financial statements must be certified by organization or individual who is admitted to practice translation as provided by law;

d) The Vietnamese documents as the originals (or copy from the Vietnamese original) established in Vietnam must not translate into English.

4. Copies of papers, diplomas must be authenticated by the competent agencies as prescribed by law.

5. In each set of dossier must be included the list of documents.

Article 14. Dossiers of application for granting permits for establishment and operation of commercial banks

1. Application for granting permits for establishment and operation of commercial banks signed by the founding shareholders, owners, founding members according to the form prescribed in Appendix 02a of this Circular.

2. The draft of Charter.

3. Scheme to establish commercial bank, including at least the following contents:

a) The need for the establishment of commercial bank;

b) Name of commercial bank, name of province/city under central authority where the its head office to be located, operation time, charter capital when establishing, operation contents;

c) The financial capability of shareholders of establishment capital contribution, limited partners;

d) Organization diagram and operation network of the bank expected in the first 03 years;

đ) List of personnel expected in which describes in detail the professional qualifications, working experience in the financial sector, banking and risk management to meet the requirements of each position and title:

(i) The Chairman, members, independent members of the Management Board, Members’ Council; Heads of the Committees of the Management Board, Members’ Council;

(ii) Heads, members, members specializing in and being responsible for the Inspection Committee;

(iii) General Director (Director), Deputy general directors (Deputy director), Chief Accountant and heads of subordinate units in the organizational structure;

e) Policy on risk management: Identify, measure, prevent, manage and control credit risk, operational risk, market risk, liquidity risk and other risks in the process of operation;

g) Information Technology:

(i) The expectation of financial investment for information technology;

(ii) Information technology system must meet the requirements for administration, risk management of commercial bank and the regulations of the State Bank;

(iii) Ability to apply information technology, which clearly states: the time to conduct investment in technology; type of technology expected to apply; expectation of managers and capacity of managers in the application of information technology; ensuring systems of information technology to be integrated and connected to the management system of the State Bank to provide information according to management requirements of the State Bank;

(iv) Dossiers of information technology infrastructure for the operation of commercial bank;

(v) Measures to ensure safety, security corresponding to the type of service to be expected to deploy;

(vi) Identify, measure and implement risk management plan for the technology expected to apply in the operation of commercial bank;

(vii) Expect to assign responsibilities for reporting and controlling activities of information technology systems.

h) Ability to stand and development of the bank on the market:

(i) Analyze and evaluate the banking market, which state the real status, challenges, and prospects;

(ii) Ability to participate and compete on the market of the bank, in which prove the advantage of bank as participating in the market;

(iii) Development strategy, extension of the network of operation and contents of banking activities, type of customers and numbers of customers. In particular, specify in detail the satisfaction of the conditions for activity contents with conditions.

i) Internal systems of inspection, audit:

(i) The principle of operation of internal inspection system;

(ii) The draft of basic internal regulations of the organization and operation of the bank, at least including the internal regulations specified in clause 2 of Article 93 of the Law on Credit Institutions and the following provisions:

- Regulation on organization and operation of the Management Board, Members’ Council, Inspection Committee, Executives;

- Regulation on organization and operation of the head office, branches, and other subordinate units.

(iii) The contents and process of operation of the internal audit.

k) Business plan expected in the first 03 years, in which at least must include the following contents: market analysis, strategy, objectives and action plans, the financial statements of each year (balance sheet and report of business results, reports of cash flow, minimum capital safety norms, the criteria for performance effect and explanation of ability to perform financial targets in each year).

4. Documents proving the capacity of the apparatus of management, inspection and administration expected:

a) Curriculum vitae in the form prescribed in Appendix 03 of this Circular, Judicial record (or equivalent document) in accordance with law regulations;

b) Certified copies of documents evidencing qualifications;

c) The other documents evidencing the satisfaction of the conditions and standards stipulated in the Law on Credit Institutions and relevant provisions of law;

d) Where the person to be elected as member of the Management Board, Members’ Council, member of the Inspection Committee, General Director (Director) is not nationality of Vietnam, in addition to the documents mentioned above, it must have written commitment to meet fully the conditions for residing and working in Vietnam.

5. Minutes of the meetings of founding shareholders, founding members or the document of owner on the selection of the Preparatory Committee, Head of the Preparatory Committee, passing the draft of Charter, Scheme to establish the bank and a list of positions of administration, inspection and execution expected.

Article 15. Dossiers of application for granting permits to establish and operate joint-stock commercial banks

1. Components of a dossier are as prescribed in Article 14 of this Circular;

2. List of founding shareholders and expected list of shareholders of establishment capital contribution according to the form provided in Appendix 04 of this Circular.

3. Dossiers of the shareholders of establishment capital contribution:

a) For individual:

(i) The application for purchase of shares for individuals by the form prescribed in Annex 05a of this Circular;

(ii) A list of the relevant persons by the form provided for in Appendix 06 of this Circular;

(iii) In addition to the components of dossier mentioned above, the founding shareholders must have the following additional documents:

- Curriculum vitae by the form prescribed in Appendix 03 of this Circular, judicial record (or equivalent documents) in accordance with law provisions;

- Financial statements of 03 years preceding the year of application for granting permits of enterprises managed by the founding shareholders or copies of diplomas  or postgraduate diplomas in economic or law specialties;

- The written commitment of each founding shareholder of support to the bank for solving difficulties in the case of bank’s capital difficulty or liquidity;

- A list of all the assets valued at 100 million dong or more, loans, and related documentation to prove of the individual by the form prescribed in Appendix 07 of this Circular;

b) For the organization:

(i) The application for purchase of shares by the form prescribed in Appendix 05b of this Circular.

(ii) A list of the relevant persons by the form provided in Appendix 06 of this Circular.

(iii) Establishment license or business registration certificate or equivalent document;

(iv) A written authorization of capital contribution representative to the bank in accordance with law provisions;

(v) A Charter of organization and operation;

(vi) Identity cards or passports of the legal representative and capital contribution representative of the organizations to the bank;

(vii) A document issued by the competent authority to approve for the organization to contribute capital to establish the bank;

(viii) Financial statements of the year preceding the year of application for granting permit and financial statement to the nearest time counted from the time of filing the application for granting permit that has been independently audited by an auditing firm of the list of auditing organizations published by the Ministry of Finance qualification for auditing enterprises and the statements having no excepting idea of the auditing units;

(ix) In addition to the components of dossier mentioned above, the founding shareholders must have the following additional documents:

- Curriculum vitae of the contributed capital representative by the form prescribed in Appendix 03 of this Circular, judicial record in accordance with law provisions;

- The written commitment of financial support in the case of bank’s capital difficulty or liquidity;

- Financial statements of 05 years preceding the year of application for granting permit that have been independently audited by auditing firms of the list of auditing organizations published by the Ministry of Finance qualification for auditing enterprises and the statements having no excepting idea of the auditing units;

(x) Table to determine the financial ability to contribute capital to establish joint-stock commercial bank of the organizations that are not credit institutions by the form as stipulated in Appendix 08 of this Circular;

(xi) Documents from the tax agency, social insurance agency certifying on the full implementation of the tax liabilities, social insurance of the organizations.

4. After receiving written approval in principle, the Preparatory Committee should submit the following additional documents:

a) Charter of the organization and operation of joint-stock commercial bank passed by the General Meeting of Shareholders;

b) Minute of meeting of first General Meeting of Shareholders;

c) Minute of meeting of the Management Board passing the contents on the election of the Chairman of the Management Board; Minute of meeting of the Inspection Committee on the election of head of the Inspection Committee and specialized and responsible members of the Inspection Committee;

d) The decision of the Management Board on the appointment of the General Director (Director), Deputy General Director (Deputy Director), Chief Accountant;

đ) List of shareholders of establishment capital contribution by the form prescribed in Appendix 04 of this Circular;

e) Document of a commercial bank where the Preparatory Committee opening account of capital contribution confirms the amount of contribution of the shareholders of establishment capital contribution;

g) Document evidencing ownership or right to use lawfully the headquarter of the joint-stock commercial bank;

h) The internal regulations on organization and operation of joint-stock commercial bank specified in point i, clause 3 of Article 14 of this Circular that have been passed by the General Meeting of Shareholders, the Management Board;

i) Report of the founding shareholder as domestic commercial bank on the satisfaction of the conditions specified at point g, clause 2 of Article 9 of this Circular from the time of application for granting permit to the time of submission of additional documents.

Article 16. Dossiers of application for granting permit to establish and operate joint-venture banks, banks with 100% foreign capital

1. Components of dossier are as prescribed in Article 14 of this Circular.

2. Dossier of the owner, founding member as a foreign credit institution:

a) The financial statements which have been audited in 05 years preceding the year of application for granting permit having no excepting idea of the auditing unit;

b) Copy of license to establish and operate or equivalent document;

c) Documents issued by the competent authorities of the country of origin providing for information on foreign credit institution as follows:

(i) The contents of operation to be allowed in the country of origin at the time of application for issuance of permit;

(ii) The law compliance status of banking activity and other law provisions within the past 05 consecutive years preceding the year of application for issuance of permit and to the time of submission of application for issuance of permit;

(iii) Capital safety ratio and the other rates of safety assurance as prescribed by the country of origin in the year preceding the year of application for issuance of permit and to the time of submission of application for issuance of permit;

(iv) The compliance status with regulations on risk management and appropriation in the year preceding the year of application for issuance of permit and to the time of submission of application for issuance of permit.

d) Document or documentation of the international credit rating organization to rate credit for foreign credit institution within 06 months prior to the time of application;

đ) The Charter of organization and operation of foreign credit institution;

e) Report on the processes of establishment, operation, and development orientation of foreign credit institution to the time of submission of application for issuance of permit;

g) Decision on appointing representative of contributed capital at the joint venture bank, bank with 100% foreign capital of foreign credit institution as prescribed by law together with the passport of the representative of contributed capital.

3. Dossiers of the founding members of joint venture bank as commercial banks of Vietnam are composed of papers and documents specified at point b, clause 3 of Article 15 of this Circular, except for written request for purchase of shares.

4. The joint venture contract with the principal contents as prescribed by law; capital contribution agreement between the founding members of the bank with 100% foreign capital;

5. Documents issued by the competent authorities of the country of origin committing to ensure the ability to monitor all activities of foreign bank (including the activities of joint venture bank, bank with 100% foreign capital in Vietnam) on the basis of consolidation under the international practice.

6. Written commitments of the owners, the founding members of:

a) Availability of support of finance, technology, management, administration, and operations for the joint-venture bank, bank with 100% foreign capital;

b) Assurance to maintain the actual value of the charter capital of joint-venture bank, bank with 100% foreign capital not less than the legal capital rate and fully satisfying provisions on operational safety in accordance with provisions of the State Bank.

7. After receiving written approval in principle, the Preparatory Committee should submit the following additional documents:

a) The Charter of organization and operation of bank that has been passed by the Council of Members;

b) Document of a commercial bank where the Preparatory Committee opens account of contribution capital confirms the amount of capital contribution of the founding member;

c) Documents evidencing ownership or right to use lawfully the headquarter of commercial bank;

d) The internal regulations on organization and operation of joint venture bank, bank with 100% foreign capital specified in point i, clause 3 of Article 14 of this Circular that have been passed by the Members’ Council;

đ) Report of the founding shareholder as domestic commercial bank on the satisfaction of the conditions specified at point g, clause 2 of Article 9 of this Circular from the time of application for granting permit to the time of submission of additional documents;

e) Document issued by the competent authority of the country of origin assessing the owner, founding member as foreign credit institution meeting the conditions specified at points a, c, đ, clause 2 of Article 10 of this Circular from the time of submission of application for permit to the time of submission of additional documents;

g) In addition to the components of dossier specified in the points a, b, c, d, đ and e of this clause, the Preparatory Committee to establish the bank with 100% foreign capital as one member limited liability company must submit the following additional documents:

(i) The decision of owner on the appointment of Chairman of the Board of Members, members of the Board of Members, members of the Inspection Committee, General Director (Director), Deputy General Director (Deputy Director) Chief Accountant;

(ii) Minutes of meetings of the Inspection Committee on the election of the head of Inspection Committee and specialized and responsible members of Inspection Committee.

h) In addition to the components of dossier as specified in the points a, b, c, d, đ, e, clause 7 of this Article, the Preparatory Committee to set up joint venture bank, bank with 100% foreign capital as Limited Liability Company with two or more members must submit the following additional documents:

(i) Minute of meeting of first limited partners;

(Ii) Minute of meeting of the Members’ Council passing the contents of the election of the Chairman of the Council of Members; Minute of meeting of the Inspection Committee on the election of head of the Inspection Committee and specialized and responsible members of Inspection Committee;

(iii) The decision of the Members’ Council on the appointment of General Director (Director), Deputy General Director (Deputy Director), Chief Accountant.

Article 17. Dossiers of application for permit to establish foreign bank branches

1. Application for granting permit for establishment of foreign bank branch signed by the legal representative of the foreign bank by the form prescribed in Appendix 02b of this Circular.

2. Scheme to establish foreign bank branch includes the following basic contents:

a) The need for establishment of foreign bank branch;

b) Name of foreign bank branch, name of province/city under central authority where it is expected to locate its office, operation content, working time, capital granted as establishment;

c) Organizational chart and list of personnel expected of foreign bank branch in accordance with the provisions of Article 89 of the Law on Credit Institutions; list of personnel expected must be detailed the professional qualification, working experience, risk management capacity meeting the requirements of each position;

d) Policy on Risk Management: Identify, measure, prevent, manage and control credit risk, operational risk, market risk, liquidity risk and other risks in the process of operation;

đ) Information Technology:

(i) The expectation for financial investment in information technology;

(ii) Information technology system must meet the requirements for governance, risk management of foreign bank branch and regulations of the State Bank;

(iii) Ability to apply information technology, in which clearly states: the time to conduct investment in technology; type of technology expected to apply; expectation of managers and capacity of managers in the application of information technology; ensuring systems of information technology to be integrated and connected to the management system of the State Bank to provide information according to management requirements of the State Bank;

(iv) Records of information technology infrastructure for the operation of foreign bank branch;

(v) Measures to ensure safety, security corresponding to the type of service to be deployed;

(vi) Identify, measure and implement risk management plans for the technology expected to apply in the operation field of foreign bank branch;

(vii) Expect distribution of responsibilities for reporting and controlling activities of information technology systems.

e) Ability to stand and develop branches of foreign bank on the market:

(i) Analysis and evaluation of the banking market, which states the real status, challenges and prospects;

(ii) Ability to participate and compete in the market of foreign bank branches, which demonstrates the advantages of foreign bank branches as participating in market;

(iii) Development strategy, extension of the network of operation and contents of banking activities, type of customers and numbers of customers. In particular, specify the satisfaction of the conditions for activity contents with conditions;

g) Systems of control, internal audit:

(i) The principle of operation of internal control systems;

(ii) The draft of basic internal regulations of the organization and operation of the foreign bank branches, at least including the internal regulations specified in clause 2 of Article 93 of the Law on Credit Institutions and the provisions of the organization and operation of foreign bank branches;

(iii) The operation process of the internal audit.

h) Business plan expected in the first 03 years, in which at least must include the following contents: market analysis, strategy, objectives and action plans to obtain such objectives, the financial statements of each year (balance sheet and report of business results, reports of cash flow, minimum capital safety norms, the criteria for performance effect and explanation of ability to perform financial targets in each year).

3. Charter of the parent bank.

4. Curriculum Vitae of the General Director (Director) of foreign bank branch expected according to the form prescribed in Appendix 03 of this Circular to be certified by the parent bank, judicial record (or equivalent document) in accordance with law provisions; degrees, certificates evidencing the capacity, qualifications and other documents evidencing the satisfaction of the conditions and standards as stipulated in the Law on Credit Institutions and relevant provisions of law of General Director (Director) expected.

5. A copy of the license of establishment and operation or the equivalent documents issued by the competent authorities of the country of origin for the parent bank.

6. Documents issued by the competent authorities of the country of origin providing for information on the parent bank as follows:

a) The contents of operation to be allowed in the country of origin at the time of application for issuance of permit;

b) The law compliance status of banking activity and other law provisions within the 05 consecutive years preceding the year of application for issuance of permit and to the time of submission of application for issuance of permit;

c) Capital safety ratio and the other rates of safety assurance as prescribed by the country of origin in the year preceding the year of application for issuance of permit and to the time of submission of application for issuance of permit;

d) The compliance status with regulations on risk management and appropriation in the year preceding the year of application for issuance of permit and to the time of submission of application for issuance of permit.

7. Documents issued by the competent authorities of the country of origin committing to ensure the ability to monitor all activities of the parent bank (including the operation of foreign bank branch in Vietnam) on the basis of consolidation according to international practice.

8. The financial statements that have been audited in 05 years preceding the year of application for issuance of permit of the parent bank.

9. Document or documentation of the international credit rating organization to rate credit for parent bank within 06 months prior to the time of application.

10. Document of the parent bank guaranteeing to take full responsibility for all obligations and commitments of its branch in Vietnam; to maintain the actual value of the capital issued of the branch not lower than the legal capital and meet the full regulations on operation safety in accordance with provisions of the State Bank.

11. Report on the process of establishment, operation, and development orientation of the parent bank to the time of submission of application for issuance of permit.

12. Document of the parent bank signed by the legal representative on the appointment of the Preparatory Committee and authorization to the head of the Preparatory Committee.

13. After receiving written approval in principle, the Preparatory Committee must add the following documents:

a) A written appointment of General Director (Director) of foreign bank branch signed by the legal representative of the parent bank;

b) Documents proving the legal use right of the office of foreign bank branch;

c) The internal regulations on organization and operation of foreign bank branch specified at point g, clause 2 of this Article passed by the parent bank;

d) The document issued by the competent authority of the country of origin assessing the parent bank to meet the conditions specified at points a, c, đ, Clause 2 of Article 10, point b, clause 2 of Article 11 of this Circular from the time of submission of application for issuance of permit to the time of submission of additional documents.

Article 18. Dossiers of application for permits to establish representative offices

1. An application for granting permit to establish representative office signed by the legal representative of foreign credit institution, other foreign institution with banking activities by the form specified in Appendix 02c of this Circular.

2. The copy of operation permit or equivalent document issued by the competent authority of the country of origin for the foreign credit institution, other foreign institution having banking activity.

3. Documents issued by the competent authorities of the country of origin providing for information on the law compliance of foreign credit institution, other foreign institution having banking activity.

4. Documents issued by the competent authorities of the country of origin permitting foreign credit institution, other foreign institution having banking activity to establish representative offices in Vietnam; in case provisions of the country of origin do not require a written consent, it must have evidence to prove this.

5. Report on the processes of establishment, operation of foreign credit institution, other foreign institution having banking activity to the time of submission of application for issuance of permit and development orientation of foreign credit institution, other foreign institution having banking activity in Vietnam.

6. Financial statement of the year preceding the year of submission of application for issuance of permit that has been audited of credit institution, other foreign institution having foreign banking activity.

7. The curriculum vitae of the head of representative office expected by the form prescribed in Appendix 03 of this Circular certified by foreign credit institution, other foreign institution having banking activity, judicial record (or equivalent documents) in accordance with law provisions; degrees, certificates evidencing the capacity, qualifications of the Head of Representative Office in Vietnam expected.

8. Documents proving the legal use right the office of the representative office.

Chapter 3.

REGULATION ON ORGANIZATION AND OPERATION

Section 1. GENERAL PROVISIONS

Article 19. Principles of application

Commercial banks, foreign bank branches, representative offices organize and operate under the provisions of the Law on Credit Institutions, this Circular and the relevant provisions of law.

Article 20. Language of transactions

Official documents of transaction of commercial banks, foreign bank branches, representative offices must use Vietnamese or both Vietnamese and a commonly used foreign language.

Article 21. Contents of operation

1. Commercial banks and branches of foreign banks are not permitted to conduct any business activities other than banking activities and other business activities stated in the permits granted by the State Bank for each commercial bank, branch of foreign bank.

2. The banking activities, other business activities of commercial banks, foreign bank branches specified in the Law on credit institutions shall comply with the guidance of the State Bank.

3. Contents of operation of the bank with 100% foreign capital must be the operation that owner, foreign bank own 50% of charter capital of bank with 100% foreign capital being allowed to perform in country where the owner, foreign bank locates headquarter.

4. Contents of operation of foreign bank branch must be the activities that parent bank being permitted to perform in the country where the parent bank locates headquarter.

5. Representative offices are allowed to implement activities as stipulated in Article 125 of the Law on Credit Institutions. Heads of representative offices are not permitted to sign the contract of business, investment of foreign credit institutions, other foreign institutions having banking activities with individuals and organizations in Vietnam.

Article 22. The duration of operation, change of operation duration

1. The duration of operation of commercial banks, foreign bank branches is stated in the permits maximum not exceeding 99 years; duration of operation of representative offices shall not exceed 5 years.

2. The order, procedures, and dossiers requesting for change of duration of operation shall comply with the guidance of the State Bank.

Section 2. ORGANIZATION STRUCTURE AND EXECUTIVE MANAGEMENT

Article 23. Name and headquarters of commercial banks, foreign bank branches, representative offices

1. The names of the commercial banks, foreign bank branches, representative offices must ensure:

a) In accordance with the provisions of the Enterprises Law and the provisions of relevant legislation;

b) To be named according to the corresponding guidance as follows:

(i) Joint-stock commercial bank and its proper name;

(ii) Joint-venture bank and its proper name;

(iii) One member limited liability bank and name of foreign bank and Vietnam;

(iv) Limited liability bank and the proper name for the bank with 100% foreign capital with two or more members;

(v) Bank and name of foreign bank - branch in province and city under central authority where its branch is located. In the case foreign bank sets up two branches or more in a province or city, it must add name to ensure the distinguishing of the different branches;

(vi) Representative offices and name of foreign credit institutions, other foreign institutions having banking activities - names of provinces and cities under central authority where their representative offices are located.

2. Headquarters of the commercial banks must meet the regulations of head offices of enterprises in accordance with the Law on Enterprises and the following conditions:

a) As the working place of the Management Board, Members’ Council, the Executive Board stated in the license and business registration as prescribed by law;

b) It must be in the territory of Vietnam, in an address that can identify the room number (if any), floor number, building name (for the office building for rent), house number, street name (alley) or name of commune, ward, township, district, town and provincial city, province and city under central authority. Where the commercial banks register to locate headquarter in more than a house or building with different addresses, the number of houses or buildings must be contiguous;

c) It must ensure the security of assets and compliance with the requirements of banking activities;

d) It must have management information systems of online connection between the head office with its branches and business divisions of the bank meeting the requirements of governance and risk management of commercial bank and management requirements of the State Bank.

3. The head office of foreign bank branches must meet the regulations of the business head office in accordance with the Law on Enterprises and the following conditions:

a) The working place of the General Director (Director) and Executive Board, where transactions with customers are conducted, is indicated in the license and business registration certificate as prescribed by law;

b) It must be in the territory of Vietnam, in an address that can identify the room number (if any), floor number, building name (for the office building for rent), house number, street name (alley) or name of commune, ward, township, district, town and provincial city, province and city under central authority;

c) It must ensure the security of assets and compliance with the requirements of banking activities;

d) It must have management information systems of online connection with the head office of foreign bank meeting the requirements of governance and risk management of foreign bank and management requirements of the State Bank.

4. Head of representative office must be located on the territory of Vietnam, in an address that can identify the room number (if any), floor number, building name (for the office building for rent), house number, street name (alley) or name of commune, ward, township, district, town and provincial city, province and city under central authority.

Article 24. The organizational structure of management of commercial banks, foreign bank branches

1. The organizational structure of management of commercial banks:

a) Commercial banks must have the organizational structure, management and administration apparatus, internal audit, risk management, internal control system in accordance with the type of operation in accordance with provisions of the Law on Credit Institutions and other concerned provisions of law.

b) The organizational structure of management of joint-stock commercial bank comprises: the General Meeting of Shareholders, Management Board, Inspection Committee, General Director (Director).

c) The organizational structure of management of state-owned commercial bank owned 100% of chartered capital by the State, joint venture bank, bank with 100% foreign capital, including: Members’ Council, Inspection Committee, General Director (Director).

2. The organizational structure of management of foreign bank branches:

The organizational structure, management and administration of foreign bank branches in Vietnam shall be decided by their parent banks in accordance with the laws of the countries where foreign banks are headquartered and provisions of the Law on Credit Institutions on the organizational structure, management, administration and internal control, internal audit and must be approved in writing by the State Bank prior to implementation.

Article 25. The organizational structure of the Committee of Risk Management Committee of Personnel

1. Management Board, Council of Members must establish Risk Management Committee, the Committee of Personnel and regulate decision mechanisms for the recommendations of these two Committees.

2. A Committee must have at least three members, including Head as member of the Management Board, Members’ Council, and other members decided on appointment, dismissal by Management Board, Members’ Council according to the Charter of commercial bank. A member of the Management Board, Members’ Council only is the head of a Committee. For joint-stock commercial bank, the Risk Management Committee should have at least one member as an independent member of the Management Board.

Article 26. Working Regulations of the Committee of Risk Management and Committee of Personnel

1. When establishing the Committee, Management Board, Members’ Council have to issue working Regulations, functions and duties of the Committees. Shortly after promulgation, the commercial banks send these internal regulations to the State Bank (Inspection Agency, banking supervision) for report.

2. Regulation of work and functions, tasks of the Committee at least include the following contents:

a) Working Regulations:

(i) The number of members of the Committee and the responsibilities of each member;

(ii) The regular meetings of the Committee;

(iii) The irregular meeting of the Committee;

(iv) The decision making of the Committee;

b) Duties and functions of the Committees:

(i) Committee on Risk Management issues:

- To advise the Management Board, Members’ Council in the promulgation of procedures and policies under their jurisdiction relating to risk management in banking activities in accordance with the law provisions and the bank Charter.

- To analyze and provide warnings on the safety of the bank before risks, potential risks that may affect and preventive measures for these risks in the short term as well as long term.

- To review and evaluate the appropriateness and effectiveness of the procedures and policies of current risk management of the bank to make recommendations and proposals to the Management Board, the Council of Members on the requirement needs to change procedures, existing policies, and operational strategies.

- To advise the Management Board, Council of Members in the decision on the approval of the investments, the related transactions, governance policy and risk treatment plan within their functions and duties assigned by the Management Board, Council of Members.

(ii) Committee on personnel matters:

- To advise the Management Board, Council of Members of the scale and structure of the Management Board, Council of Members, executive people in accordance with the scale of operation and development strategy of the bank.

- To advise the Management Board, Council of Members on handling personnel matters arising in the course of carrying out the procedures for election, appointment, removal and dismissal of the titles of members of Management Board, Council of Members and members of the Inspection Committee and executives of the bank in accordance with the law provisions and the Charter of the bank.

- To research and advise the Management Board, Council of Members in the issuance of internal regulations of the bank under the authority of the Management Board, Council of Members on salary, remuneration, bonuses and regulation of the recruitment, training and other treatment policy for The executives, officials and employees of the bank.

Article 27. Registration of Charter, contents of amendments and supplements to the Charter

1. Charter of commercial banks must contain the major contents provided for in clause 1 of Article 31 of the Law on Credit Institutions and not contrary to the provisions of the Law on credit institutions, other provisions of concerned law. Commercial banks fully bear responsibility before law for the contents of the Charter, contents of amendments, and supplements to the Charter.

2. Charters, contents of amendments, supplements to the Charter of commercial banks take into force since having been approved and signed for promulgation by the General Meeting of Shareholders, the Board of Members.

3. Once granting license, the State Bank certifies the Charter registration of commercial banks. In case of amendments, supplements to the Charter, commercial banks must register amendments, supplements to the Charter of commercial banks in the State Bank (Agency of inspection, banking supervision) within 15 days from the date of adoption.

4. Commercial bank sends 01 set of dossier by post or submits directly to the State Bank (Agency of inspection, banking supervision) requesting confirmation of registration  for amendments, supplements to the Charter. A dossier comprises:

a) A written request of commercial bank, in which states clearly the reasons and the need of changing the contents of the Charter (attached appendix in details of the contents of the current Charter, the contents offered for amendments, supplements and legal basis to modify, supplement).

b) Resolution of the General Meeting of shareholders, Resolutions of the Council of Members adopting the amendment and supplement of the contents of the Charter. In particular, the Resolution must be shown clearly the amendments and supplements.

c) The Charter included the amendments and supplements of Charter of commercial bank.

d) Other documents as required by the State Bank to clarify the issues proposed for supplement (if any).

5. State Bank (Agency of inspection, banking supervision) is responsible for certification of registration of amendments, supplements to the Charter of the Commercial Bank in writing within 07 days from the date of receipt of complete and valid dossier.

6. When detecting the contents of the Charter, contents of amendments, supplements to the Charter inconsistent with the provisions of law, the State Bank (Agency of inspection, banking supervision) sends a written request to the commercial bank for amending and supplementing accordingly.

Article 28. Internal regulations

1. The commercial banks must establish internal regulations as stipulated in Article 93 of the Law on Credit Institutions. The internal regulations, amendments and supplements of internal regulations must be issued by the the Management Board, Council of Members.

2. Branches of foreign banks must set up the internal regulations as stipulated in Article 93 of the Law on Credit Institutions, or use the internal regulations issued by the parent bank under the guidance of the State Bank.

3. Shortly after issuance or right after the date using the internal regulations issued by the parent bank, commercial banks, foreign bank branches shall send the internal regulations, amendments, supplements of internal regulations to the State Bank (Agency of inspection, banking supervision) as a basis for inspection and supervision.

Section 3. CHARTER CAPITAL, CAPITAL FUNDED

Article 29. Charter capital, capital funded

1. The charter capital of commercial banks:

a) The charter capital of commercial banks is the capital actually funded by the owners or capital that has been actually contributed by shareholders, the limited partners and be recorded in the bank's Charter.

b) The bank's charter capital may be increased from the following sources:

(i) Reserve and supplement fund to charter capital; equity surplus Fund; retained profit and other funds as prescribed by law;

(ii) Issue of shares to the public, issue of individual stock;

(iii) Conversion from convertible bonds into ordinary shares;

(iv) Capital funded additionally by the owners, limited partners;

(v) Other sources as prescribed by law.

2. Capital funded of foreign bank branches:

a) Capital funded of foreign bank branch is the capital actually funded by the parent bank to branch of foreign bank and is inscribed in the permit.

b) Capital funded of foreign bank branches can be increased from the following sources:

(i) Retained profit;

(ii) Capital funded additionally by the parent bank;

(iii) Other sources of capital as prescribed by law.

Article 30. Repurchase of shares at the request of the shareholders or by decision of the joint-stock commercial banks

1. The repurchase of shares of shareholders of joint-stock commercial banks must ensure compliance with the provisions of law.

2. Joint-stock commercial bank is only permitted to repurchase shares of shareholders if, after paying all of the shares repurchased that still ensures the safety ratio in the banking activity, real value of charter capital not lower than the legal capital; in case of repurchase of shares resulting in reduction of charter capital of joint-stock commercial banks, it shall be prior written consent by the State Bank.

3. The order, procedures, and dossiers requesting for repurchasing shares resulting to reduce the charter capital of joint-stock commercial banks shall comply with the guidelines of the State Bank.

Article 31. Transfer of contributed capital, repurchase of contributed capital of joint-venture banks, banks with 100% foreign capital

1. The transfer of capital contribution, repurchase of the capital contribution must ensure the compliance with the provisions of the Enterprises Law.

2. Within 05 years from the date of being granted permit, founding members are only transferred their contributed capital to other founding members. Within 03 years from start to contribute capital to joint-venture bank, bank with 100% foreign capital, the limited partners are only transferred their contributed capital to the other limited partners.

3. The transfer of contributed capital to the organization not being the limited partners of joint venture bank, bank with 100% foreign capital, it needs to ensure capital contribution ratio as stipulated in clause 4, clause 5, Article 2 of this Circular and satisfy the following conditions:

a) For banks with 100% foreign capital:

(i) the new partner must meet the conditions specified at points b, c, d, đ, e, clause 2 of Article 20 of the Law on Credit Institutions and clause 2 of Article 10 of this Circular;

(ii) Where the transfer has led to another foreign bank’s owning 50% of charter capital of bank with 100% foreign capital, the new foreign bank must satisfy the conditions specified in clause 3 of Article 21 of this Circular.

b) For joint venture bank:

(i) The new partner as a foreign bank must satisfy the conditions specified at points b, c, d, đ, e, clause 2 of Article 20 of the Law on Credit Institutions and clause 2 of Article 10 of this Circular;

(ii) The new partner as Vietnam commercial bank must meet the conditions specified in points a, b, c, g, clause 2 of Article 9 of this Circular.

4. Conditions for repurchase of contributed capital:

a) Request to repurchase the contributed capital of limited partners, payment conditions and handling of the contributed capital shall comply with provisions on the repurchase of the contributed capital of the Enterprises Law;

b) After paying all the contributed capital repurchased, the bank still ensures to make the payment of all debts and other financial obligations and ensure the safety ratio in the banking activities, real value of charter capital shall not be less than the legal capital;

c) To comply fully with the provisions on risk management and appropriation according to provisions at the time requesting the State Bank to approve the repurchase of the contributed capital;

d) Business continuity with interest in the 05 years preceding the year requesting for repurchase of the contributed capital and has no accumulated losses;

đ) Not being fined by the State Bank administrative violations in the monetary field and banking operations in the 05 years preceding the year requesting for repurchase of the contributed capital and to the time recommending the State Bank to approve repurchase of the contributed capital.

5. The transfer of contributed capital, repurchase of the contributed capital must be approved by the State Bank in writing prior to implementation. The order, procedures, and dossier requesting for transfer of contributed capital shall follow the guidance of the State Bank.

Chapter 4.

RESPONSIBILITIES OF ORGANIZATIONS AND CONCERNED INDIVIDUALS

Article 32. Responsibilities of the Preparatory Committee

1. Preparation and submission of documents is in accordance with this Circular.

2. After receiving written approval in principle, the Preparatory Committee shall:

a) Organize the first General Meeting of shareholders, the first meeting of Limited partners to adopt the contents as prescribed in clause 12, 15, Article 2 of this Circular;

b) Notify the shareholders of capital contribution, owners, limited partners, the parent bank to deposit into the account opened by the Preparatory Committee at a commercial bank in Vietnam.

3. Guide shareholders of capital contribution to conduct the capital contribution and assessment of records of shareholders of capital contribution.

4. Take responsibility for the completeness and accuracy of contents of records filed to the State Bank.

5. Notify the shareholders of capital contribution, founding members, parent banks the reason of not being granted permit in case of refusal to approve by the State Bank.

6. Present in front of the Appraisal Council on satisfaction of the conditions for being licensed as required by the State Bank.

7. Protect the contents in the scheme to establish commercial bank, foreign bank branch in front of the Appraisal Council.

Article 33. Responsibilities of the Head of the Preparatory Committee

1. Convene the General Meeting of Shareholders, the first meeting of founding members as prescribed by law.

2. Sign documents under the jurisdiction to propose the establishment of the bank until being granted permit by the State Bank.

Article 34. Responsibilities of organizations and individuals involved in the establishment, organization and operation of commercial banks, foreign bank branches and representative offices

Organizations and individuals involved in the establishment, organization and operation of commercial banks, foreign bank branches and representative offices must provide for complete, accurate and timely information according to requirements of the State Bank, the Preparatory Committee in accordance with provisions of this Circular and take responsibility before the law for the above information.

Article 35. Coordination in granting permits

1. State Bank sends for written consultation of:

a) People's Committees of provinces and cities directly under the Central Government where the headquarters of commercial banks, offices of foreign bank branches, representative offices are proposed to locate of their locations;

b) Ministry of Public Security (Department of Financial Security, Currency, Investment) on the list of personnel expected to be elected and appointed as members of the Management Board, Council of Members, members of the Inspection Committee and General Directors (Directors) of commercial banks, General Directors (Directors) of foreign bank branches, heads of representative offices.

2. Within 15 days after receiving written request of the State Bank, the concerned agencies mentioned above comment in writing to the State Bank. Beyond the above time limit, the State Bank has not received written opinions of the concerned agencies, it is considered that the agencies have no objections to the application for granting permit of the State Bank.

3. State Bank grants permits based on the opinions of concerned agencies.

Article 36. Responsibilities of the State Bank

1. Appraisal Council appraises dossiers for granting permits to establish and operate commercial banks, permits to establish foreign bank branches (called as Appraisal Council):

a) Components of Appraisal Council shall be decided by the Governor of the State Bank, including the Governor or a Deputy Governor (authorized by the Governor) as President, other members are the heads of the units specified in clauses 2 , 3, 4, 5, 6, 7, 8 of this Article;

b) Duties of the Appraisal Council:

(i) To appraise the dossiers requesting for granting permit to establish and operate commercial banks, permits for the establishment of foreign bank branches.

During the appraisal process, the Appraisal Council applies the form of direct interview to assess professional qualifications, the rationality and feasibility of the scheme established for each content of the scheme to establish, knowledge of the banking field of those who are expected to be elected to the position of management and administration of commercial banks, General Directors (Directors) expected of the foreign bank branches;

(ii) Select the list of eligible dossiers on the basis of the opinions of the members to submit to the State Bank Governor for deciding to grant permits.

2. Inspection agency, banking supervision:

a) To act as contact point for receiving and evaluating dossiers for granting permits of establishment and commercial banking operations, permits for the establishment of foreign bank branches:

(i) For the dossiers requesting for issuance of permits for the establishment and operation of commercial banks, permits for the establishment of foreign bank branches prior to approval in principle:

- The inspection agency and banking supervision evaluate the adequacy and validity of dossiers and submit to the State Bank governor for sending official dispatch to the Preparatory Committee for confirming the adequacy and validity of dossiers or requiring additional documents.

- Evaluate the dossier and send a written request for appraisal including dossier to members of the Appraisal Council for consideration. A written request for appraisal must be stated clearly the evaluation results and point of view of proposal for the grant of permit;

- Synthesize comments from members of the Appraisal Council and submit to the Appraisal Committee President to convene a meeting of the Appraisal Council’s members to consider the dossier requesting for permit;

- Based on Minute of Meeting of the Appraisal Council, submit to the State Bank Governor for sending official dispatch to the Preparatory Committee for its approval or disapproval in principle (stating clearly the reasons).

The contents of written approval in principle include: approve in principle the establishment and operation of commercial bank, the establishment of foreign bank branch; approve the list of expected personnel of the commercial bank, branch of foreign bank; approve organizational structure, governance, internal control, and internal audit of branch of foreign bank.

(ii) For additional documents after being approved in principle:

- In case of expiry of the submission for additional documents as prescribed in this Circular but having not received or having received incomplete, invalid documents, dossiers, the inspection agencies, banking supervision submitting to the Governor of State Bank for sending written notice to the Preparatory Committee on the invalidity of written approval in principle.

- In case of receiving fully and validly the additional documents, inspection agency, banking supervision is responsible for evaluation and submission to the State Bank Governor for signing decision to grant permit for the establishment and operation of commercial bank, permit for the establishment of foreign bank branch and written confirmation of registration for charter of commercial bank, if it is adequate conditions and ensure adequate dossiers as prescribed in this Circular or document of not issuing permit (stating clearly the reasons).

b) To act as contact point of the receipt, evaluation, and submission to the State Bank Governor of dossiers of application for permit to establish representative office.

c) To be responsible for management and recordkeeping of permit granting after the permit;

d) To inspect and supervise the performance of commercial banks, foreign bank branches after opening operation under the scheme to establish commercial banks, foreign bank branches.

đ) To inspect and supervise the implementation of regulations on organization and operation of commercial banks, foreign bank branches, representative offices in accordance with this Circular.

e) To deal with the problems in the implementation of the Circular;

3. Legal Department:

a) Within 30 days from the date the inspection agency, supervision of banks sends a written request, the Legal Department appraises dossier requesting for granting permit and sends written reply to the inspection agency, bank supervision;

b) As the contact point for handling of legal issues in the licensing process.

4. Department of Monetary Policy:

a) Within 30 days from the date the inspection agency, supervision of banks sends a written request, the Monetary Policy Department appraises dossier requesting for granting permit and sends written reply to the inspection agency, bank supervision;

b) Assess the impact of the establishment of new banks related to monetary policy of the State Bank.

5. Department of International Cooperation:

a) Within 30 days from the date the inspection agency, supervision of banks sends a written request, the Department of International Cooperation appraises dossier requesting for granting permit and sends written reply to the inspection agency, bank supervision;

b) Assess the matters arising in relation to the commitments as Vietnam joined the World Trade Organization and bilateral agreements and other multilateral agreements.

6. Department of Information Technology:

a) Within 30 days from the date the inspection agency, supervision of banks sends a written request, the Department of Banking Information Technology appraises dossier requesting for granting permit and sends written reply to the inspection agency, bank supervision;

b) Assess the issues related to information technology of commercial banks, foreign bank branches.

7. Department of Finance - Accounting:

a) Within 30 days from the date the inspection agency, supervision of banks sends a written request, the Department of Finance - Accounting appraises dossier requesting for granting permit and sends written reply to the inspection agency, bank supervision;

b) Assess the issues related to the financial capacity of the shareholders in accordance with provisions of this Circular and the relevant provisions of current law.

8. State Bank- branches in provinces, cities where the bank requesting for the establishment intends to locate its headquarter:

a) Within 30 days from the date the inspection agency, supervision of banks sends a written request, the State Bank- branches in provinces, cities where commercial banks, foreign bank branches requesting for the establishment intend to locate their headquarter appraises dossier requesting for granting permit and sends written reply to the inspection agency, bank supervision;

b) To act as contact point for working with local authority where commercial banks, branches of foreign banks intend to locate their headquarters on the establishment of commercial banks, foreign bank branches in the area (if recommended);

c) To act as contact point for the direct examination, direct and supervise commercial banks, foreign bank branches to perform and ensure the conditions as prescribed by law, the State Bank prior to opening their operations;

d) Suspend commercial banks, foreign bank branches’ opening operations in case they do not meet the conditions of opening operation;

e) Report to the State Bank Governor on the conditions and situation of commercial banks, foreign bank branches’ opening operation.

9. Exchange department:

a) To guide commercial banks, foreign bank branches, representative offices:

(i) To pay the fee for a license;

(ii) To conduct the procedures for opening accounts, transferring capital into the escrow account, and releasing funds.

b) To send to inspection agency, bank supervision the copies of documents confirming full receipt of license fees, documents certifying the transfer of capital into the escrow account and the funds release.

Chapter 5.

IMPLEMENTATION PROVISIONS

Article 37. Effect

1. This Circular takes effect from February 01, 2012.

2. From the effective date of this Circular, the terms and conditions, the following documents expire:

a) Section III, V, VI, Part I, Section I, V, VIII, Part II, Section IV, clause 56, Section VI, Part III, Section I, Part IV, Part V Circular No.03/2007/TT-NHNN dated 05/6/2007 of the State Bank’s Governor guiding the implementation of Decree No.22/2006/ND-CP dated 28/02/2006 of the Government on organization and operation of foreign bank branches, banks venture banks, banks with 100% foreign capital and representative offices of foreign credit institutions in Vietnam.

b) Article 4, 5, 8, 9, 10, 24, 27, 32, 40, clause 2 of Article 38, the contents relating to approval of the amendments and supplements to the Charter provided in Article 41, 42 of Circular No.06/2010/TT-NHNN dated 26/02/2010 of the State Bank guiding the implementation of some Articles of Decree No.59/2009/ND-CP dated 16/7/2009 on organization and activities of commercial banks.

c) Circular No.09/2010/TT-NHNN dated 26/03/2010 of the State Bank on issuance of licenses for the establishment and operation of joint-stock commercial banks.

d) Article 1, clause 1, Article 4 of Circular No.24/2011/TT-NHNN dated 31/08/2011 on the implementation of the plan to simplify administrative procedures in the field of establishment and banking operation under the Resolutions of the Government on simplification of the administrative procedures under the management functions of the State Bank of Vietnam.

Article 38. Organization of implementation

Chief Office, Chief Inspector, bank supervisors, heads of units of the Vietnam State Bank, Directors of State Bank - branches in provinces, cities, Chairmen and members of the Management Boards, Members’ Councils, Chief Board and members of the Inspection Committees, General Directors (Directors) of commercial banks, the General Directors (Directors) of foreign bank branches, heads of representative offices of foreign credit institutions, other foreign organizations having banking activities and concerned organizations, individuals shall implement this Circular.

 

 

FOR THE GOVERNOR
DEPUTY GOVERNOR




Tran Minh Tuan

Last Updated ( Friday, 06 April 2012 09:54 )  

Consultancy Support

Tel:
Fax:
 
+(84-24)3.557.9668
 
+(84-24)3.557.9598
Please send your inquiry via E-mail: info@dao-lawfirm.com
icon_email

Library

Joomla Templates and Joomla Extensions by JoomlaVision.Com

Affiliates

notary
auction

Web link

bg_trai3