Conditions for founding members of People's Credit Funds in Vietnam from December 20, 2024

On December 20, 2024, the Government of Vietnam issued Decree 162/2024/ND-CP stipulating the conditions for granting licenses to people's credit funds, microfinance institutions, and the conditions for owners of credit institutions that are single-member limited liability companies, founding shareholders, and founding members.

Conditions for founding members of People's Credit Funds in Vietnam from December 20, 2024

Article 11 of Decree 162/2024/ND-CP stipulates the conditions for founding members of people's credit funds in Vietnam from December 20, 2024, as follows:

(1) For individuals:

- Vietnamese citizens aged 18 or over, with full civil act capacity, and registered permanent or temporary residence within the operational area of the people's credit fund. In the case of temporary residence registration, individuals must engage in production, business, or be workers in the operational area of the people's credit fund and must provide documentation to prove this;

- Not subject to criminal prosecution, nor serving a prison sentence; not undergoing administrative measures at compulsory detoxification centers or compulsory education centers; not banned by courts from holding positions, practicing certain professions, or performing certain jobs; not previously convicted of serious crimes or worse without having their conviction expunged;

- Not falling under the categories prohibited according to the Law on Cadres, Civil Servants, and other relevant legal regulations.

(2) For households:

- Households with members permanently residing within the operational area of the people's credit fund; members of the household sharing assets for production and service business of the household;

- Household members must appoint one member of the household as a representative to exercise the rights and obligations of a member of the people's credit fund. The representative of the household must be authorized in writing by the household members according to legal regulations and must meet the conditions stipulated in (1).

(3) For legal entities:

- Legal entities (excluding social funds, charitable funds) that are operating normally and have their main office located in the operational area of the people's credit fund;

- The representative of the legal entity participating as a member of the people's credit fund must be the legal representative of the legal entity or an individual authorized by the legal representative to participate.

Conditions for licensing People's Credit Funds in Vietnam from December 20, 2024

According to Article 10 of Decree 162/2024/ND-CP, to be licensed as a people's credit fund from December 20, 2024, it must meet the following conditions:

- A minimum charter capital equal to the legal capital stipulated by the Government of Vietnam at the time of applying for the license.

- At least 30 members who meet the conditions stipulated in Article 1 of Decree 162/2024/ND-CP, having sufficient financial capacity to contribute capital to establish the people's credit fund.

- Managers, executives, and members of the Supervisory Board who meet the standards and conditions as regulated in Clause 6, Article 41 of the Law on Credit Institutions.

- An organizational structure of the Board of Directors, Supervisory Board compliant with the regulations of the Law on Credit Institutions.

- Articles of association that align with the regulations at the Law on Credit Institutions and other relevant legal provisions.

- A founding scheme, feasible business plan for the first 3 years of operation.

More details can be found in Decree 162/2024/ND-CP effective from December 20, 2024.

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