What are the latest guidelines on charters of credit institutions being joint-stock companies or limited liability companies in Vietnam in 2024?
- What are the latest guidelines on charters of credit institutions being joint-stock companies or limited liability companies in Vietnam in 2024?
- Who are the legal representatives of credit institutions in Vietnam?
- How to handle cases where credit institutions face bank runs in Vietnam?
- Vietnam: When does the latest Law on Credit Institutions 2024 come into force?
What are the latest guidelines on charters of credit institutions being joint-stock companies or limited liability companies in Vietnam in 2024?
Pursuant to the provisions of Clause 1, Article 39 of the Law on Credit Institutions 2024, charter of a credit institution that is a joint-stock or limited liability company shall contain the following principal contents:
- Its name and place of its head office;
- Operation contents;
- Duration of operation;
- Charter capital, methods of capital contribution and increase and decrease in charter capital;
- Tasks and powers of General Meeting of Shareholders, Board of Directors, Board of Members and Board of Controllers, and rights and obligations of Director General (Director);
- Methods of election, appointment and dismissal of members of the Board of Directors, Board of Members, and Board of Controllers and Director General (Director);
- Name and address of its head office, nationality of each owner and capital contributor, for the credit institution that is a limited liability company;
- Rights and obligations of owners and capital contributors, for the credit institution that is a limited liability company; and those of shareholders, for the credit institution that is a joint-stock company;
- Legal representative (s);
- Principles of finance, accounting, control and internal audit;
- Methods of ratifying decisions made by the credit institution; principles of settlement of internal disputes;
- Bases and methods of determining remuneration, salaries and bonuses paid to managers, executives and members of the Board of Controllers;
- Cases of and procedures for dissolution;
- Procedures for amendment to the Charter.
What are the latest guidelines on charters of credit institutions being joint-stock companies or limited liability companies in Vietnam in 2024? (Image from the Internet)
Who are the legal representatives of credit institutions in Vietnam?
Pursuant to the provisions of Article 11 of the Law on Credit Institutions 2024, A legal representative of a credit institution shall be defined in that credit institution’s Charter and must be one of the following persons:
- President of the Board of Directors or the Board of Members of the credit institution;
- General Director (Director) of the credit institution.
How to handle cases where credit institutions face bank runs in Vietnam?
In case where credit institutions face bank runs, it must follow the following instructions as prescribed in Article 191 of the Law on Credit Institutions 2024:
A credit institution facing bank run shall notify the State Bank and implement the following measures:
- Increasing charter capital, provided capital and implementation time; roadmap for reduction in holdings of shares/stakes of shareholders and capital contributors specified at Point b, Clause 1, Article 159 of the Law on Credit Institutions 2024;
- Improving liquidity; increasing ownership of liquid assets; selling and transferring assets, and adopting other solutions to meet safety requirements in banking operations;
- Enhancing business efficiency;
- Strengthening management and administration capacity;
- Handling existing financial problems and weaknesses, bad debts, collateral and imposing remedial measures on violations against regulations of law;
- Taking communication and information technology measures to overcome liquidity difficulties.
(1) Not paying dividends in cash; suspending or restricting credit extension and other activities using funds of the credit institution; adopting other measures for payment of deposits made by clients;
(2) Implementing measures indicated in the remedial plan in case the bank run occurs according to regulations in Article 143 of the Law on Credit Institutions 2024; updating and adjusting the plan if necessary.
A credit institution subject to early intervention where the bank run occurs shall report to the State Bank on bank run, review and re-assess the situation in order to develop and adjust the remedial plan according to regulations in Article 158 and Article 160 of this Law. The credit institution shall implement the remedial plan which is developed and adjusted.
The credit institution may apply the following assisting measures when the bank run occurs:
(1) Sell valuable papers to the State Bank through open market operations with the interest rate of 0%;
(2) Carry out foreign currency transactions with the State Bank to ensure liquidity according to regulations of the Governor of State Bank;
(3) Commercial banks, cooperative banks, people’s credit funds and microfinance institutions may take special loans from the State Bank; from deposit insurers according to regulations of law on deposit insurance; from other credit institutions.
Vietnam: When does the latest Law on Credit Institutions 2024 come into force?
Pursuant to the newly officially promulgated Law on Credit Institutions 2024, specifically Article 209 of the Law on Credit Institutions 2024, it stipulates:
The Law on Credit Institutions 2024 comes into force from July 1, 2024, except for Clause 3, Article 200 and Clause 15, Article 210 of the Law on Credit Institutions 2024, which come into force from January 1, 2025.
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