What are regulations on contribution of charter capital or share capital of borrowers that are enterprises in Vietnam of Vietnam Asset Management Company (VAMC)?

What are regulations on contribution of charter capital or share capital of borrowers that are enterprises in Vietnam of Vietnam Asset Management Company (VAMC)? - image from internet

Pursuant to Clause 10 Article 1 of the Circular 32/2019/TT-NHNN:

1. VAMC is entitled to make contribution of charter capital or share capital of the borrower that is an enterprise in the following forms:

a) Convert the bad debts purchased with special bonds into the charter capital or share capital of the borrower;

b) Use assets (except the bad debt purchased with special bonds) and/or lawful funds to make contribution of charter capital or share capital of the borrower (including conversion of the bad debt purchased at the market price into the charter capital or share capital of the borrower).

2. The conversion of bad debts purchased with special bonds into the charter capital or share capital of the borrower shall only be made in the following cases:

a) The borrower is a domestic enterprise engaging in business lines other than insurance, securities, money remittance, foreign exchange, gold trading, factoring, issuance of credit cards, consumer credit, intermediary payment services, and credit information provision;

b) VAMC reaches a written agreement with the debt-selling credit institution on the conversion of the bad debt purchased with special bonds into the charter capital or share capital of the borrower before carrying out that conversion.

c) The debt-selling credit institution is a commercial bank that meets the following requirements:

(i) It is allowed to contribute capital and purchase shares according to its establishment and operation license;

(ii) It maintains the minimum capital adequacy ratio as prescribed in Point b Clause 1 Article 130 of the Law on Credit Institutions and the ratio of capital contribution/share purchase as prescribed in Article 129 of the Law on Credit Institutions, and has the actual value of its charter capital lower than the legal capital (the contributed capital/share capital converted from bad debts purchased with special bonds must be taken into accounts when calculating the ratio/value of the charter capital as mentioned above) at the time of obtaining the document specified in Point b of this Clause;

(iii) It earns profits as shown in its financial statements, which have been audited by an independent audit organization, of the year preceding the year in which it obtains the document specified in Point b of this Clause;

(iv) It did not incur any penalties for administrative violations against debt classification, setting aside and use of provisions for risks, capital contribution and share purchase within the consecutive period of 12 months preceding the month in which it obtains the document specified in Point b of this Clause;

(v) Its organizational structure, Board of Directors, Board of Members, Control Board, and General Director (Director) conform to regulations of the Law on Credit Institutions and SBV’s regulations.

3. Within 05 working days from the day on which the bad debt purchased with special bonds is converted into the charter capital or share capital of the borrower, VACM shall resell the stakes/shares to the debt-selling credit institution at their values and make payment of special bonds.

4. The money earned from the bad debt during the period commencing from the day on which VAMC purchases the bad debt with special bonds to the day on which the bad debt is converted into the charter capital or share capital shall be settled according to Clause 2 Article 43 hereof.

5. In case of contribution of charter capital/ share capital of the borrower that is an enterprise as prescribed in Point b Clause 1 of this Article, VAMC must satisfy the following requirements:

a) The plan for contribution of charter capital/share capital of the borrower is feasible and approved by SBV. The approved plan must include analysis and assessment of efficiency of the contribution of charter capital/share capital, financial status and business results of the borrower, funding sources for making capital contribution, possibility of recovering contributed capital and proposed measures for recovering contributed capital and restructuring of the borrower;

b) VAMC is entitled to engage in the restructuring of the borrower after making contribution of charter capital/share capital;

c) The contribution of charter capital/share capital does not result in breach of regulations on limits of the charter capital/share capital contribution by VAMC as prescribed in Clause 2 Article 33 of this Circular;

d) The borrower has the possibility of recovering its solvency and business after VAMC contributes charter capital/share capital;

dd) The borrower is not under the process of dissolution or bankruptcy and does not has its operation license revoked.