Additional regulations on transfer of contributed capital of a joint venture bank in Vietnam

Additional regulations on transfer of contributed capital of a joint venture bank in Vietnam (Internet image) 

Regarding this issue, LawNet would like to answer as follows:

On October 31, 2023, the Governor of the State Bank of Vietnam issued Circular 13/2023/TT-NHNN providing amendments to Circulars prescribing licensing, organization, operation, and application and procedures for approval of changes of commercial banks and foreign bank branches.

1. What is a joint venture bank?

 Joint venture bank (JV bank) means a commercial bank that is established in Vietnam with capital contributed by a Vietnamese party (which comprises at least a Vietnamese bank and no more than a Vietnamese enterprise that is not a bank) and a foreign party (which comprises at least a foreign bank and no more than a foreign enterprise that is not a bank) on the basis of a JV contract. The JV bank shall be considered a Vietnamese juridical person and is headquartered in Vietnam. The JV bank is established and organized in the form of a multi-member limited liability company with a maximum number of members of 05 of which any member and their related persons shall not hold more than 50% of the charter capital.

(Clause 1 of Article 1 of Circular 13/2023/TT-NHNN)

2. Additional regulations on transfer of contributed capital of a joint venture bank in Vietnam

Regulations on transfer of contributed capital of a joint venture bank in Vietnam are added as follows:

A new partner that is a non-bank enterprise is required to meet the following conditions:

- It is duly established under the law of Vietnam or the law of a foreign country;

- A state-owned enterprise must provide a written permission given by a competent authority to make capital contribution to the JV bank in accordance with regulations of law;

- If it is an enterprise issued with a license for establishment and operation in banking, securities or insurance sector, it must comply with capital contribution requirements laid down in relevant laws.

- It must have the owner's equity of at least VND 1.000 billion and total assets of at least VND 2.000 billion in the last 03 consecutive years prior to the year of submission of an application for approval for purchase and sale or transfer of the stake which is between 1% and 5% of the charter capital of the JV bank; or it must have the owner's equity of at least VND 200 billion and total assets of at least VND 400 billion in the last 03 consecutive years prior to the year of submission of an application for approval for purchase and sale or transfer of the stake which does not exceed 1% of the charter capital of the JV bank;

- If an enterprise is required to meet the legal capital requirement to operate in a certain business line, its owner's equity minus the legal capital must not be lower than the capital amount contributed as committed according to financial statements, which have been audited by an independent auditor and given no qualified opinion, of the year prior to the year of submission of an application for approval for purchase and sale or transfer of stake;

- It has a profitable business for the last 03 years prior to the year of submission of an application for approval for purchase and sale or transfer of stake;

- It is not allowed to use its funds raised or borrowed from other organizations or individuals to make capital contribution;

- It has fulfilled all tax and social insurance obligations as prescribed by law by the date of submission of an application for approval for purchase and sale or transfer of stake;

- It is not a founding shareholder, owner, founding member or strategic shareholder of another credit institution duly established and operating in Vietnam.

(Clause 3 of Article 1 of Circular 13/2023/TT-NHNN)

Nguyen Ngoc Que Anh

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