From August 6, 2023, what conditions must owners and founding members as Vietnamese enterprises of non-bank credit institutions meet?

From August 6, 2023, what conditions must owners and founding members as Vietnamese enterprises of non-bank credit institutions meet?

In Article 12 of Circular 30/2015/TT-NHNN amended by Clause 2, Article 1 of Circular 15/2016/TT-NHNN and Clause 4, Article 1 of Circular 05/2023/TT-NHNN with amendments to the conditions of owners, founding members are as follows:

1. A founding member that is a Vietnamese enterprise (except Vietnamese commercial banks) must:

a) Comply with provisions set out in Clauses 2, 3, 4, 5 and Points a, b, c, Clause 7, Article 11 herein;

b) Have at least VND 1,000 billion in owner’s equity, at least VND 2,000 billion in total assets for three straight fiscal years preceding the year in which the application for the licence is submitted. If the enterprise operates in the areas that require a certain level of legal capital, ensure that the owner’s equity according to the audited financial statement of the year preceding the time the application for the licence is submitted is not smaller than the promised capital contribution;

c) If the enterprise is licensed to operate in the areas of securities, insurance, the contribution of capital must be compliant with relevant law provisions;

Article 11 of Circular 30/2015/TT-NHNN is amended by Clause 2, Article 1 of Circular 15/2016/TT-NHNN, Article 4 of Circular 17/2018/TT-NHNN and Clause 3, Article 1 of Circular 05/ 2023/TT-NHNN as follows:

1. Requirements as prescribed in Clause 1, Article 20 of the Law on credit institutions;

2. For founding members as Vietnamese enterprises (except Vietnamese commercial banks), following requirements should be met:

 

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4. For owners, founding members as foreign credit institutions:

a) Requirements as prescribed in Clause 2, Article 20 of the Law on credit institutions;

b) Requirements as prescribed in Points g(ii), Clause 2, Article 11 hereof;

c) Have at least US$ 10 billion in total assets at the end of the year preceding the year of submission of applications for licensing;

Thus, owners and founding members who are Vietnamese enterprises of non-banking credit institutions (except Vietnamese commercial banks) from August 6, 2023 must comply with the following regulations:

- Not being a strategic shareholder, founding shareholder, owner or founding member of another credit institution established and operating in Vietnam.

- Don't use mobilized capital or borrowed capital from other organizations or individuals to contribute capital.

- In addition to the provisions in Clauses 1 and 2 of this Article, founding shareholders being organizations must comply with the following provisions:

+ Established under Vietnamese law;

+ Profitable business for 03 consecutive financial years before the year of submitting the application for a license and up to the time of submitting additional documents to be considered for a license;

+ Fully fulfill tax and social insurance obligations as prescribed by law up to the time of submission of application for license;

- Having equity of at least VND 1,000 billion and total assets of at least VND 2,000 billion in the three consecutive fiscal years preceding the year of submitting the application for a license.

In case an enterprise operates in a business line that requires a legal capital level, it must ensure its equity according to the audited financial statement of the year preceding the time of submitting the application for a license the minimum legal capital equal to the amount of capital committed to contribute;

- In case an enterprise is granted a License for establishment and operation in the field of securities and insurance, it must comply with the capital contribution in accordance with relevant laws.

What is amendment of regulations for founding shareholders of non-banking credit institutions from August 6, 2023?

Article 11 of Circular 30/2015/TT-NHNN is amended by Clause 2, Article 1 of Circular 15/2016/TT-NHNN, Article 4 of Circular 17/2018/TT-NHNN and Clause 3, Article 1 of Circular 05/ 2023/TT-NHNN stipulates that from August 6, 2023, founding shareholders of non-banking credit institutions must comply with and meet the following conditions:

- Not being a strategic shareholder, founding shareholder, owner or founding member of another credit institution established and operating in Vietnam.

- Funds mobilized or borrowed from other organizations and individuals may not be used to contribute capital.

- In addition to provisions as set out in Clauses 2, 3, 4, 6 of this Article, a founding shareholder that is an individual must:

a) Have Vietnamese nationality and full legal capacity according to laws;

b) Not banned from establishing enterprises according to the Law on Enterprises, the Law on Cadres and Civil Servants;

- In addition to provisions as set out in Clauses 2, 3, 4, 5 of this Article, a founding shareholder that is an organization must:

a) Be established according to laws of Vietnam;

b) Have a profitable business for three straight years preceding the year in which the application for the licence is submitted and by the time the complete application for the licence is submitted;

c) Have fulfilled its tax and social insurance obligations according to laws by the time the application for the licence is submitted;

d) If the organization is a Vietnamese enterprise (except Vietnamese commercial bank), it must:

(i) Have at least VND 500 billion in owner’s equity, at least VND 1,000 billion in total assets for three straight years preceding the year in which the application for the licence is submitted. If the enterprise operates in the areas that require a certain level of legal capital, ensure that the amount remaining after the legal capital is subtracted from the owner’s equity according to the audited financial statement of the year preceding the time the application for the licence is submitted is not smaller than the promised capital contribution;

(ii) If the enterprise is licensed to operate in the areas of securities, insurance, the contribution of capital must be compliant with relevant law provisions;

dd) If the organization is a Vietnamese commercial bank, it must:

(i) Have at least VND 100,000 billion in total assets, comply fully with regulations on risk management and establishment of provisions for risks from the time the application for the licence is submitted to the time the complete application for the licence is submitted;

(ii) Not violate the minimum safety limits, ratios for transactions as prescribed by the State Bank conducted in the year preceding the year in which the application for the licence is submitted and by the time the complete application for the licence is submitted;

(iii) Ensure minimum capital adequacy ratio after contribution of capital for the establishment of a non-bank credit institution;

(iv) Not be penalized for administrative violations against regulations on currencies and banking for two straight years preceding the year in which the application for the licence is submitted and by the time the complete application for the licence is submitted.

What conditions must owners and founding members being foreign credit institutions comply with in Vietnam?

In Article 12 of Circular 30/2015/TT-NHNN amended by Clause 2, Article 1 of Circular 15/2016/TT-NHNN and Clause 4, Article 1 of Circular 05/2023/TT-NHNN, owners and founding members being foreign credit institutions must comply with the following conditions:

a) Have a profitable business for three straight years preceding the year in which the application for the licence is submitted and by the time the complete application for the licence is submitted;

b) Have at least US$ 10 billion in total assets at the end of the year preceding the year in which the application for the licence is submitted;

c) Not commit serious violations of regulations on banking and other laws of its home country for five straight years preceding the year in which the application for the licence is submitted and by the time the complete application for the licence is submitted;

d) Have experience of international transactions, be rated ‘stable’ or better by international credit rating organizations, be able to fulfill financial commitments and normal activities even under unfavorable economic conditions;

dd) Be evaluated by competent agencies of its home country as able to ensure capital adequacy ratio and other safety ratios, comply fully with regulations of the home country on risk management and establishment of provisions for risks from the year preceding the year in which the application for the licence is submitted and by the time the complete application for the licence is submitted;

e) Not be a strategic shareholder, owner or founding member of other credit institutions established and operating in Vietnam;

g) If the foreign credit institution is a leasing company, the balance for finance lease and provision of loans must account for at least 70% of the company’s total assets.

Note: Circular 05/2023/TT-NHNN takes effect from August 6, 2023.

Best regards!