What conditions must be met to apply for a license for a microfinance organization as a limited liability company with two or more members?
What are the conditions for applying for a license for a microfinance organization that is a limited liability company with two or more members?
According to specific guidance in Section 2, Part II of the Administrative Procedures issued together with Decision 658/QD-NHNN in 2023, the conditions are as follows:
Capital Requirements
(1) Have a charter capital of at least the regulatory minimum capital level as stipulated by the Government of Vietnam.
Founding Members
(2) The founding members of the microfinance organization, which is a limited liability company with two or more members, must meet the following conditions:
- At least one founding member must be a political organization or a socio-political organization;- At least one founding member must be an organization that has directly participated in managing or operating a safe and sustainable microfinance program or project for at least 03 (three) consecutive years prior to the date of application;- For individual founding members:- Must hold Vietnamese nationality and have full civil act capacity according to law;- Must not belong to the groups prohibited from establishing and managing enterprises as stipulated by the Law on Enterprises; must not have been administratively sanctioned in the field of monetary and banking activities at the highest fine level for acts violating license, governance, operation, shares, stock, capital contribution, purchasing shares, lending, purchasing corporate bonds, and safety ratios according to law on administrative violations in the field of monetary and banking within the 24 (twenty-four) months prior to the application date;- Must not be a founding shareholder or founding member of another credit institution in Vietnam;- Must have the financial ability to contribute capital to establish the microfinance organization and commit not to use entrusted capital, mobilized capital, or loans from other organizations and individuals to contribute capital; and commit to financially supporting the microfinance organization in case of capital or liquidity difficulties;- For Vietnamese organizational founding members:- Must be established according to Vietnamese law;- Must not be a founding shareholder, owner, founding member, or strategic shareholder of another credit institution in Vietnam;- Must have the financial ability to contribute capital to establish the microfinance organization and commit not to use entrusted capital, mobilized capital, or loans from other organizations and individuals to contribute capital; and commit to financially supporting the microfinance organization in case of capital or liquidity difficulties;- Must have fulfilled tax and social insurance obligations according to regulations up to the time of application;- Must not have been administratively sanctioned in the field of monetary and banking at the highest fine level for acts violating license, governance, operation, shares, stock, capital contribution, purchasing shares, lending, purchasing corporate bonds, and safety ratios according to law on administrative violations in the field of monetary and banking within the 24 (twenty-four) months prior to the application date;- If the founding member is an enterprise, it must operate profitably for 03 (three) consecutive years prior to the year of application;- If the founding member is an enterprise operating in a business line requiring regulatory capital, it must ensure that its owner's equity minus the regulatory capital is at least equal to the committed contributed capital based on audited financial statements of the year preceding the application date;- If the founding member is an enterprise licensed to establish and operate in the fields of banking, securities, or insurance, the capital contribution must comply with relevant legal provisions;- For foreign organizational founding members:- Must be a foreign bank;- Must not have seriously violated banking operation regulations in its home country within 05 (five) consecutive years before the application year and up to the issuance of the license;- Must not be a founding shareholder, owner, founding member, or strategic shareholder of another credit institution in Vietnam;- Must have the financial ability to contribute capital to establish the microfinance organization and commit not to use entrusted capital, mobilized capital or loans from other organizations and individuals to contribute capital; and commit to financially supporting the microfinance organization in case of capital or liquidity difficulties.
Management and Operations
(3) Must have managers, executives, and control committee members who satisfy the following standards and conditions:
- Standards and conditions for the Chairman and members of the Members' Council:+ Members of the Members' Council must:- Not fall under the cases stipulated in Clause 1, Article 33 of the Law on Credit Institutions (as amended and supplemented);- Have at least 02 (two) years of work experience in one of the fields of economics, finance, accounting, auditing, banking, and law, and hold a university degree or higher;- Not have been administratively sanctioned in the field of monetary and banking at the highest fine level within the 24 (twenty-four) months prior to being elected.+ The Chairman of the Members' Council must additionally:- Meet the standards and conditions for Members of the Members' Council;- Have held a management or executive position in a unit within the fields of banking or finance for at least 02 (two) years as per the unit's Charter or equivalent documents, or have a leadership role equivalent to that of the head of a department or higher in a government agency, economic organization, political organization, or socio-political organization for at least 02 (two) years, or have at least 03 (three) years of experience managing a microfinance organization.- Standards and conditions for members of the Control Committee:+ Must not fall under the cases stipulated in Clause 1, Article 33 of the Law on Credit Institutions (as amended and supplemented);+ Hold a university degree or higher in one of the fields of economics, finance, accounting, auditing, banking, business administration, or law and have at least 01 (one) year of experience in a related field, or hold a diploma from a junior college or higher in one of these fields and have at least 03 (three) years of experience in microfinance-related positions;+ Not have been administratively sanctioned in the field of monetary and banking at the highest fine level within the 24 (twenty-four) months prior to being elected;+ Dedicated members of the Control Committee must reside in Vietnam during their tenure.- Standards and conditions for the General Director (Director):+ Must not fall under the cases stipulated in Clause 1, Article 33 of the Law on Credit Institutions (as amended and supplemented);+ Hold a university degree or higher in one of the fields of economics, finance, accounting, auditing, banking, business administration, or law;+ Have at least 02 (two) years of experience as an executive of a credit institution or at least 02 (two) years as a General Director (Director) of an enterprise with owner's equity at least equal to the minimum capital level of the microfinance organization as stipulated by law, or have at least 03 (three) years of experience in a management position in the field of microfinance, or at least 05 (five) years of direct work experience in the fields of finance, banking, accounting, or auditing;+ Not have been administratively sanctioned in the field of monetary and banking at the highest fine level within the 24 (twenty-four) months prior to being appointed;+ Must reside in Vietnam during their tenure.- Standards and conditions for Deputy General Directors (Deputy Directors), Chief Accountant, and Branch Directors:+ Deputy General Directors must not fall under the cases stipulated in Clause 1, Article 33 of the Law on Credit Institutions (as amended and supplemented); Chief Accountant and Branch Directors must not fall under the cases stipulated in Clause 2, Article 33 of the Law on Credit Institutions;+ Hold a university degree or higher in one of the fields of economics, finance, accounting, auditing, banking, business administration, law, or the professional area they will undertake, or hold a university degree outside these fields and have at least 02 (two) years of direct work experience in the fields of banking, finance, or the professional area they will undertake;+ Not have been administratively sanctioned in the field of monetary and banking at the highest fine level within the 24 (twenty-four) months prior to being appointed;+ Must reside in Vietnam during their tenure.
Charters and Regulations
(4) Must have a charter that is not contrary to the provisions of the Law on Credit Institutions dated June 16, 2010, and the Law amending and supplementing certain articles of the Law on Credit Institutions dated November 20, 2017, and other related legal provisions. The charter must include the following main contents:- Name and location of the head office;- Scope of activities;- Term of operation;- Charter capital, method of capital contribution, and increase or decrease of charter capital;- Duties and powers of the General Meeting of Shareholders, the Board of Directors, the Members' Council, the General Director (Director), and the Control Committee;- Procedures for electing, appointing, and removing members of the Board of Directors, the Members' Council, the General Director (Director), and the Control Committee;- Full name, address, nationality, and other basic characteristics of owners, capital-contributing members for credit institutions that are limited liability companies; and founding shareholders for credit institutions that are joint-stock companies;- Rights and obligations of owners, and capital-contributing members for credit institutions that are limited liability companies; rights and obligations of shareholders for credit institutions that are joint-stock companies;- Legal representative;- Financial, accounting, control, and internal audit principles;- Procedures for passing resolutions of the credit institution; principles for resolving internal disputes;- Basis and method for determining remuneration, salaries, and bonuses for managers, executives, and Control Committee members;- Cases of dissolution;- Procedures for amending and supplementing the charter.
Operational Plans
(5) Must have a feasible establishment scheme and business plan for the first 03 (three) years of operation.
Conditions to apply for a license for a microfinance organization that is a limited liability company with two or more members
Procedures for issuing licenses for microfinance organizations that are limited liability companies with two or more members?
Based on Section 2 of Appendix II of the Administrative Procedures issued together with Decision 658/QD-NHNN in 2023 as follows:
Step-by-Step Procedures
Step 1: The Preparatory Committee prepares 01 (one) set of documents requesting preliminary approval and submits it to the State Bank of Vietnam.
Step 2: Within 10 (ten) days from the date of receipt of the preliminary approval application, the State Bank of Vietnam sends a confirmation letter to the Preparatory Committee if the documents are complete and valid; if the documents are incomplete, the State Bank of Vietnam sends a request for supplementation and completion.
Step 3: Within 05 (five) working days from the date of the confirmation letter of receipt of valid documents, the State Bank of Vietnam sends requesting opinions to:- The People's Committee of the province or centrally controlled city where the microfinance organization is to be headquartered about the establishment of the microfinance organization;- The People's Committee of the province or centrally controlled city where founding members implement microfinance programs/projects regarding the effectiveness of these microfinance programs/projects for local development;- The branch of the State Bank of Vietnam in the location where the microfinance organization is to be headquartered regarding the establishment of the microfinance organization, the list of personnel proposed for election and appointment as Chairman and members of the Members' Council, Head and members of the Control Committee, General Director (Director) of the microfinance organization (if necessary);- The Ministry of Foreign Affairs and the Ministry of Public Security regarding the capital contribution by foreign banks for the establishment of the microfinance organization.
Step 4: Within 15 (fifteen) days from the date of receipt of the request for opinion from the State Bank of Vietnam, the consulted units must provide written responses.
Step 5: Within 80 (eighty) days from the date of receipt of complete and valid documents, the State Bank of Vietnam provides written approval in principle for the establishment of the microfinance organization and the proposed list of personnel for election and appointment as Chairman and members of the Members' Council, Head and members of the Control Committee, General Director (Director) of the microfinance organization. If not approved, the State Bank of Vietnam sends a written response to the Preparatory Committee, stating the reasons.
Step 6: Within 60 (sixty) days from the date of receipt of the written in-principle approval for the establishment of the microfinance organization, the Preparatory Committee submits the application for the license to the State Bank of Vietnam. If the application is not received or is incomplete within this period, the in-principle approval expires.
Step 7: Within 02 (two) working days from the date of receipt of complete application documents for the license, the State Bank of Vietnam confirms in writing that it has received the complete documents.
Step 8: Within 30 (thirty) days from the date of receipt of complete application documents for the license as stipulated in Step 6, the State Bank of Vietnam issues the license; if not issued, the State Bank of Vietnam provides written reasons.
What is the fee for performing the licensing procedure for microfinance organizations that are limited liability companies with two or more members?
According to Section 2 of Appendix II of the Administrative Procedures issued together with Decision 658/QD-NHNN in 2023, the fee for conducting licensing procedures for microfinance organizations that are limited liability companies with two or more members is 200,000 VND.
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