GOVERNMENT

No. 01-2014-ND-CP

 

SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness

 

Hanoi, 3 January 2014

DECREE ON

PURCHASE BY FOREIGN INVESTORS OF SHAREHOLDING IN VIETNAMESE CREDIT INSTITUTIONS

 

Pursuant to the Law on Organization of the Government dated 25 December 2001; Pursuant to the Law on State Bank of Vietnam dated 16 June 2010;

Pursuant to the Law on Credit Institutions dated 16 June 2010; Pursuant to the Law on Enterprises dated 29 November 2005;

Pursuant to the Law on Securities dated 29 June 2006 as amended by Law 62 dated 24 November 2010; On the proposal of the Governor of the State Bank;

The Government hereby issues a Decree on purchase by foreign investors of shareholding in Vietnamese credit institutions.

 

CHAPTER 1

General Provisions

 

Article 1      Governing scope

This Decree regulates the conditions and procedures for purchase of shareholding [in Vietnamese credit institutions by foreign investors]1; maximum shareholding by foreign investors, and maximum shareholding of any one foreign investor in any one Vietnamese credit institution; and the conditions applicable to Vietnamese credit institutions in order to sell their shareholding to foreign investors.

 

Article 2      Applicable entities

1.         Shareholding  credit  institutions  and  credit  institutions  converting  their  legal  form  to  become shareholding credit institutions (all referred to as Vietnamese credit institutions).

2.       Foreign investors.

3.   Other organizations and individuals involved in purchase by foreign investors of shareholding in Vietnamese credit institutions.

 

Article 3      Interpretation of terms

In this Decree, the following terms are construed as follows:

1.         Shareholding credit institution means a credit institution established and organized in the form of a shareholding company and includes shareholding commercial banks, shareholding finance companies and shareholding finance leasing companies.

2.         Credit institution converting its legal form to become a shareholding credit institution means a credit institution currently converting its legal form from a credit institution operating in the form of a limited liability company to become a credit institution operating in the form of a shareholding company.

3.       Foreign investor includes foreign organizations [institutions] and foreign individuals.

4.       Foreign organization includes:

(a)        An organization established and operating under the laws of a foreign country and any branch of such institution overseas or in Vietnam;

(b)     An  organization,  closed-ended  fund,  members'  fund  or  securities  investment  company established and operating in Vietnam with foreign capital contribution ratio above 49%.

5.       Foreign individual means any person who does not hold Vietnamese nationality.

6.       Foreign strategic investor means a foreign organization with financial capacity and whose authorized person provides a written undertaking to have a close connection regarding long-term interests with the Vietnamese credit institution and to assist the latter to transfer to modern technology, to develop banking products and services, and to raise its financial, managerial and operational capacity.

7.       Shareholding ownership [shareholding] includes direct and indirect ownership.

 

Article 4      Currency to be used in transactions of purchase and sale of shareholding

Vietnamese dong shall be the currency to be used in transactions of purchase by and sale of shareholding in Vietnamese credit institutions to foreign investors.

 

Article 5      Participation in management of a Vietnamese credit institution

1.         Participation  and  appointment  of  a  capital  contribution  portion  representative  to  the  board  of management ["BOM"] of any one Vietnamese credit institution shall be implemented in accordance with the Law on Credit Institutions and [other] relevant laws.

2.         A foreign investor is  only permitted to  participate or2   to  appoint a  representative of  its capital contribution portion to participate on the BOM of one Vietnamese credit institution, except for the following cases:

(a)        The foreign investor participates [or] appoints a representative of its capital contribution portion to the BOM of another credit institution which is the subsidiary of the [original] Vietnamese credit institution on which the foreign investor participates on the BOM [or] has appointed a representative of its capital contribution portion to participate on the BOM;

(b)       The foreign investor participates [or] appoints a representative of its capital contribution to participate on the BOM of a weak shareholding credit institution in order to restructure it in accordance with the plan approved by the State Bank.

 

 

CHAPTER 2

Specific Provisions

Section 1

Form, Ratio and Procedures to Purchase Shareholding

 

Article 6      Form of purchase of shareholding by foreign investors

1.         Foreign  investors are  permitted to  purchase shares  of  a  shareholder in  a  shareholding credit institution.

2.         Foreign investors are permitted to purchase shares when a shareholding credit institution sells shares to increase its charter capital or sells treasury shares.

3.         Foreign investors are permitted to purchase shares when a credit institution converts its legal form to become a shareholding credit institution.

 

Article 7      Shareholding ratio applicable to foreign investors

1.         The shareholding ratio of any one foreign individual must not exceed five per cent (5%) of the charter capital of one Vietnamese credit institution.

2.         The shareholding ratio of any one foreign organization must not exceed fifteen per cent (15%) of the charter capital of one Vietnamese credit institution except for the case prescribed in clause 3.

3.       The shareholding ratio of any one strategic foreign investor must not exceed twenty per cent (20%)

of the charter capital of one Vietnamese credit institution.

4.       The shareholding ratio of any one foreign investor and its affiliates must not exceed twenty per cent (20%) of the charter capital of one Vietnamese credit institution.

5.       The total shareholding ownership of [all] foreign investors must not exceed thirty (30) per cent of the charter capital of any one Vietnamese commercial bank. The total shareholding ownership of [all] foreign investors in any one Vietnamese non-banking credit institution3  shall be implemented in accordance with the law applicable to public companies and listed companies.

6.         In a special case in order to implement restructuring of a credit institution which is weak [and/or] facing difficulties, [in order to] ensure safety of the credit institution system, the Prime Minister may, on  a  case-by-case basis,  make a  decision on  the  total  shareholding ratio  of  any  one  foreign organization [or] any one foreign strategic investor, and the total level of shareholding of foreign investors in any one weak shareholding credit institution which is restructured, in excess of the limits prescribed in clauses 2, 3 and 5 of this article.

7.         The shareholding ratios prescribed in clauses 1 to 6 above include any capital portion which a foreign investor entrusts to another organization or individual to purchase shareholding for it.

8.       A foreign investor converting convertible bonds of a Vietnamese credit institution into shares must ensure the shareholding ratios and conditions for share ownership prescribed in this Decree.

 

Article 8      Authority, procedures and application file for a foreign investor to purchase shareholding in a Vietnamese credit institution

1.         In a case of purchase of shareholding resulting in ownership of shares from 10% or more charter capital; and in a case of purchase of shareholding and becoming a foreign strategic investor in a Vietnamese credit institution:

(a)        The Vietnamese credit institution (in a case where it has not yet listed its shares) or the foreign investor  (in  a  case  where  the  credit  institution  has  listed  its  shares)  must  prepare  an application file and lodge it directly with, or send it by post or via the internet to the State Bank to seek approval prior to conducting the transaction;

(b)       The State Bank shall, if the conditions prescribed in articles 9 and 10 are satisfied, provide a decision consenting to the application within forty (40) days from receipt of a complete and valid file, and in a case of non-approval shall provide a response specifying its reasons.

2.         In a case of purchase of shareholding resulting in ownership of shares from 5% or more charter capital, and in a case of purchase of additional shareholding when the foreign organization already owns 5% or more charter capital of any one Vietnamese credit institution, except for the case prescribed in clause 1 above, the foreign investor shall comply with the sequence and procedures

prescribed in article 29.2 of the Law on Credit Institutions.4

3.         Cases of purchase of shareholding other than those prescribed in clauses 1 and 2 above are as follows:

 (a)       A foreign investor purchasing shareholding in a Vietnamese credit institution which has not yet listed its shares must prepare a file and lodge it directly with or send it by post to such credit institution for its decision to ensure compliance with the provisions in article 7 of this Decree.

Vietnamese credit institutions shall provide specific rules on the application file for foreign investors to purchase their shareholding, in compliance with law.

A Vietnamese credit institution must provide a written response to a foreign investor within twenty  (20) days  from  receipt  of  a  complete  and  valid  application,  and  in  a  case  of non-approval must specify its reasons.

(b)       Foreign investors are permitted to purchase shareholding in shareholding credit institutions which have listed their shares in accordance with the law on securities and securities markets, and must comply with article 7 of this Decree.

4.         The State Bank shall provide specific regulations on the application file for a foreign investor to purchase shareholding in a Vietnamese credit institution as prescribed in clauses 1 and 2 of this article.

 

Section 2

Conditions for Purchasing Shareholding

 

Article 9      Conditions applicable to foreign investors purchasing shareholding resulting in ownership of 10% or more of the charter capital of a Vietnamese credit institution

1.         [The foreign investor] must have a stable rating or higher equivalent rating provided by reputable international credit rating agencies.

2.         The  foreign  investor  must have  sufficient financial resources for  the  acquisition as  certified in independently audited financial statements of the year immediately preceding the year of lodging the application file, and such financial resources for the share acquisition must be lawful as prescribed by law.

3.       The acquisition must not affect the safety and stability of the Vietnamese credit institution system;

and must not create a monopoly or restraint of competition within such system.

4.         [The foreign investor] has not committed a serious breach of the laws in the monetary, banking, securities  and  securities  market  sectors  of  the  country  where  the  foreign  investor  has  its headquarters ["home country] or of [the law of] Vietnam in the 12 month period prior to the time of lodging the application file to purchase the shareholding.

5.         The foreign investor must have minimum total assets equivalent to USD 10 billion in the case of a foreign investor which is a foreign bank, finance company or finance leasing company; or in the case of any other organization its minimum charter capital must have been the equivalent of USD 1 billion in the year prior to the year of lodging the application file to purchase the shareholding.

 

Article 10    Conditions applicable to  foreign investors purchasing shareholding and  becoming foreign strategic investor

1.         [The foreign investor must satisfy] the conditions prescribed in clauses 1 to 4 inclusive of article 9 above.

2.         The foreign investor must be a foreign bank, foreign finance company or foreign financial leasing company permitted by the law of the home country to conduct a banking operation. A foreign finance company is only permitted to be a strategic investor in a Vietnamese finance company, and a foreign finance leasing company is only permitted to be a strategic investor in a Vietnamese finance leasing company.

3.         The foreign investor must have at least five years international working experience in the banking finance sector.

4.         The foreign investor must have minimum total assets equivalent to USD 20 billion in the year prior to the year of lodging the application file to purchase the shareholding.

5.         The foreign investor must have a written undertaking and clear plan to have a close connection regarding long-term interests with the Vietnamese credit institution and to assist the latter to apply modern technology, to develop banking products and services, and to raise its financial, managerial and operational capacity.

6.       The foreign investor must not own 10% or more of the charter capital of any other credit institution in

Vietnam.

7.         The foreign investor must undertake to own or it must already own 10% or more of the charter capital in the [relevant] Vietnamese credit institution.

 

Section 3

Sale of Shareholding by Vietnamese Credit Institutions

 

Article 11    Conditions applicable to a Vietnamese credit institution to sell shares to foreign investors

1.         A credit institution converting its legal form to become a shareholding credit institution must have an equitization plan [or] conversion plan approved by the authorized level in accordance with law, which includes a plan to sell shares to foreign investors.

2.         A shareholding credit institution must have a plan to increase its charter capital [or] a plan to sell treasury shares passed by the general meeting of shareholders, which includes a plan to sell shares to foreign investors.

In the case of a shareholding credit institution in which the State owns above 50% charter capital, the plan on  increasing charter capital or  the  plan on  selling treasury shares must be prepared in accordance with the law on financial management of State owned companies, prior to submission to the general meeting of shareholders for passing.

 

Article 12    Selling price of shareholding to foreign investors

1.         The selling price of shares to a foreign investor in a Vietnamese credit institution which has not been listed shall be fixed via an auction or by agreement [between the parties].

2.         The selling price of shares to a foreign investor in a listed shareholding credit institution shall be implemented in accordance with the law on securities and securities market.

3.         The foreign investor and the Vietnamese credit institution may reach agreement in accordance with law on whether or not payment of a deposit is required to implement the transaction being purchase of the shares.

 

Section 4

Rights and Responsibilities of Foreign Investors

 

Article 13    Rights of foreign investors

1.         To have full shareholder's rights in accordance with the law of Vietnam and the charter of the [target] credit institution in which the foreign investor purchases shares and in accordance with agreements consistent with the law of Vietnam in the contract for purchase of shareholding as between the foreign investor and the [target] credit institution.

2.         To be entitled to remit overseas income from the investment in and purchase of shareholding and income from the assignment of shares, after discharging financial obligations stipulated by the law of Vietnam.

3.         To have the right to participate or to appoint a representative to participate on the BOM, inspection committee [and/or] as Operator of the [target] credit institution in which the foreign investor has purchased shareholding in accordance with the charter of such credit institution and in accordance with the law of Vietnam.

4.       To be guaranteed by the Socialist Republic of Vietnam its other lawful rights and interests pursuant to the law of Vietnam and international treaties of which Vietnam is a member.
 

Article 14    Responsibilities of foreign investors [including lock-up periods]

1.         To fulfil all obligations of a shareholder stipulated by the law of Vietnam and the charter of the [target] credit institution in which the foreign investor purchases shares and in accordance with agreements consistent with the law of Vietnam in the contract for purchase of shareholding as between the foreign investor and the Vietnamese credit institution.

2.         To ensure and to be liable for the legality of the funding source for the purchase of shareholding, for the validity of the application file for the purchase of shareholding, and for the accuracy of information and data supplied, in accordance with the law of Vietnam.

3.         To fully report information about and to be liable for the accuracy of information about affiliates who currently own shareholding, and information about ownership of shareholding provided by affiliates or by those entrusting investment in the Vietnamese credit institution in which the foreign investor purchases shareholding.

4.         To  remit  the  total  amount  of  capital  registered  as  purchase  moneys  of  shareholding  in  the Vietnamese credit institution in accordance with the agreement in the purchase contract as between the foreign investor and the Vietnamese credit institution, in compliance with law.

5.         A foreign strategic investor is not permitted to assign the shareholding it owns in a Vietnamese credit institution to another organization or individual for a minimum five year period as from the time of becoming a strategic investor in such credit institution as recorded in the letter of approval from the State Bank.

6.         Any foreign investor being an organization owning 10% or more of the charter capital of any one Vietnamese credit  institution is  not  permitted to  assign  the  shareholding it  owns  to  any other organization or individual within a minimum three year period as from the date of ownership of 10% or more of the charter capital in such credit institution.

7.         A  foreign  investor  purchasing  shareholding  in  a  weak  shareholding  credit  institution  to  be restructured as prescribed in article 7.6 must formulate a plan on the share purchase and on restructuring such credit institution, and send it to the State Bank for evaluation and submission to the Prime Minister for decision.

8.       To comply with current regulations of Vietnam on foreign exchange control.

 

CHAPTER 3

Implementing Provisions
 

Article 15    Responsibilities of State administrative agencies

1.       The State Bank is responsible:

(a)        To  provide  implementing guidelines and  to  inspect  and  supervise  implementation of  the provisions in this Decree;

(b)       To provide information about purchase and sale of shareholding by foreign investors within its managerial [administrative] scope to the Ministry of Finance to coordinate management in accordance with the provisions in this Decree.

2.       The Ministry of Finance is responsible:

(a)        To manage and guide foreign investors in the purchase of shareholding in shareholding credit institutions which have listed their shares, ensuring compliance with the shareholding ratios prescribed in this Decree and the law on securities and securities market;

(b)       To provide information about purchase and sale of shareholding by foreign investors within its managerial scope  to  the  State  Bank  to  coordinate management in  accordance with  the provisions in this Decree.

 

Article 16    Responsibilities of Vietnamese credit institutions

1.         To arrange sale of shareholding correctly in accordance with the provisions in this Decree and other relevant laws.

2.       To disclose information in accordance with law.

3.         To fully and promptly report to the relevant authorities information about purchase of shareholding by foreign investors.

Article 17    Dealing with breaches

Any breach of the provisions of this Decree shall be dealt with in accordance with the provisions of the

Decree on imposition of administrative penalties in the currency and banking operation sectors.
 

Article 18    Effectiveness

This Decree shall be of full force and effect as from 20 February 2014 and replaces Decree 69-2007-ND- CP of the Government dated 20 April 2007 on foreign investors purchasing shareholding in Vietnamese commercial banks.
 

Article 19    Implementing provision

Ministers, heads of ministerial equivalent and Government agencies, chairmen of people's committees of provinces and cities under central authority, and chairmen of boards of management or members' councils and general directors (directors) of Vietnamese credit institutions; foreign investors and other organizations and individuals concerned are responsible to implement this Decree.

 

On behalf of the Government Prime Minister

NGUYEN TAN DUNG

 

 

 

 

 

THEGIOILUAT.VN
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Decree No. 01/2014/ND-CP of January 03, 2014, on foreign investors' purchase of shares of Vietnamese credit...

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