Procedure for Approval of Capital Contribution, Share Purchase of Credit Institutions in Accordance with Circular 25/2024/TT-NHNN
Procedure for Approval of Capital Contribution, Share Purchase of Credit Institutions According to Circular 25/2024/TT-NHNN
Which authority has the jurisdiction to approve the capital contribution, share purchase of credit institutions?Circular 25/2024/TT-NHNN regulates the procedures for approval of capital contribution and share purchase by credit institutions
On June 28, 2024, the Governor of the State Bank of Vietnam issued Circular 25/2024/TT-NHNN, regulating the conditions, dossiers, sequence, and procedures for the approval of capital contribution and share purchase by credit institutions.
Circular 25/2024/TT-NHNN applies to the following subjects:
- Commercial banks, consolidated finance companies, and specialized finance companies (hereinafter collectively referred to as credit institutions).
- Organizations and individuals involved in capital contribution, share purchase, debt conversion into equity, and equity capital of credit institutions.
Procedures for approval of capital contribution and share purchase by credit institutions under Circular 25/2024/TT-NHNN (Image from the Internet)
Which agency has the authority to approve the capital contribution and share purchase by credit institutions?
According to Article 4 of Circular 25/2024/TT-NHNN, authority to approve capital contribution and share purchase by credit institutions is specified as follows:
Authority to approve capital contribution and share purchase by credit institutions
The Governor of the State Bank considers and approves capital contribution and share purchase into other enterprises operating in the fields specified at point b, clause 1, Article 1 of this Circular and debt conversion into equity capital as specified at point d, clause 1, Article 1 of this Circular.
Chief Inspector, banking supervision considers and approves the capital contribution and share purchase for the establishment, acquisition of subsidiaries, and associates as specified at points a and c, clause 1, Article 1 of this Circular.
Thus, the authority to approve the capital contribution and share purchase by credit institutions includes:
- Governor of the State Bank:
+ Considers and approves the capital contribution and share purchase of commercial banks into other domestic enterprises operating outside the fields of insurance, securities, remittances, gold, factoring, credit card issuance, consumer credit, intermediary payment services, credit information.
+ Considers and approves the conversion of debt into equity to handle bad debts of commercial banks in domestic enterprises operating outside the fields of insurance, securities, remittances, gold, factoring, credit card issuance, consumer credit, intermediary payment services, credit information.
- Chief Inspector, banking supervision considers and approves capital contribution, share purchase of:
+ Commercial banks to:
(i) Establish, acquire subsidiaries, and associates in domestic enterprises operating in the fields of securities underwriting, securities brokerage; management, distribution of securities investment fund certificates; securities portfolio management and stock buying, selling; insurance; debt management and asset exploitation; remittances; gold; intermediary payment services; credit information.(ii) Acquire subsidiaries and associates in domestic enterprises operating in the fields of financial leasing; factoring; consumer credit; credit card issuance.+ Consolidated finance companies to establish, acquire subsidiaries, and associates operating in the fields of insurance, securities, debt management, and asset exploitation; specialized finance companies to contribute capital, purchase shares to establish, acquire subsidiaries, and associates operating in the field of debt management and asset exploitation.
What are the specific procedures for approval of capital contribution and share purchase by credit institutions?
According to Article 7 of Circular 25/2024/TT-NHNN, the procedures for approval of capital contribution and share purchase by credit institutions are specified as follows:
Procedures for approval of capital contribution and share purchase by credit institutions
Credit institutions shall prepare 01 set of dossiers as specified in Article 6 of this Circular, submit directly or via postal services to the headquarters of the State Bank (One-Stop Department). If the dossier is incomplete or invalid, within 10 days from the date of receipt of the dossier, the State Bank shall request the credit institution to supplement the dossier in writing.
Within 45 days from the date of receipt of the complete and valid dossier, the State Bank or the Agency of Banking Inspection and Supervision shall give written approval or disapproval of the capital contribution, share purchase, and conversion of debt into equity of the credit institution; if disapproved, the State Bank or the Agency of Banking Inspection and Supervision shall provide written reasons for disapproval.
Within 12 months from the date of written approval, the credit institution must complete the capital contribution, share purchase, and conversion of debt into equity. Beyond this time limit, if the credit institution has not completed the capital contribution, share purchase, and conversion of debt into equity, the written approval by the State Bank or the Agency of Banking Inspection and Supervision shall automatically expire.
The procedures for approval of capital contribution and share purchase by credit institutions are as follows:
Step 1: Prepare the dossier
- Credit institutions shall prepare 01 set of dossiers as specified in Article 6 of Circular 25/2024/TT-NHNN, submit directly or via postal services to the headquarters of the State Bank (One-Stop Department).
- If the dossier is incomplete or invalid, within 10 days from the date of receipt of the dossier, the State Bank shall request the credit institution to supplement the dossier in writing.
Step 2: Receive the dossier
Within 45 days from the date of receipt of the complete and valid dossier, the State Bank or the Agency of Banking Inspection and Supervision shall provide written approval or disapproval of the capital contribution, share purchase, and conversion of debt into equity of the credit institution;
Note: If disapproved, the State Bank or the Agency of Banking Inspection and Supervision shall provide written reasons for disapproval.
Step 3: Complete the dossier
Within 12 months from the date of written approval, the credit institution must complete the capital contribution, share purchase, and conversion of debt into equity.
Beyond this time limit, if the credit institution has not completed the capital contribution, share purchase, and conversion of debt into equity, the written approval by the State Bank or the Agency of Banking Inspection and Supervision shall automatically expire.
