Conditions for founding shareholders of non-bank credit institutions in Vietnam from December 20, 2024

Conditions for founding shareholders of non-bank credit institutions in Vietnam from December 20, 2024​ (Image from the internet)

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

Conditions for the founding shareholders of non-bank credit institutions in Vietnam from December 20, 2024

According to Article 8 of Decree 162/2024/ND-CP, the founding shareholders of non-bank credit institutions in Vietnam must meet the following conditions:

(1) General Conditions

- Not to be strategic shareholders, founding shareholders, owners, founding members of other credit institutions established and operating in Vietnam.

- Not to use mobilized capital, borrowed capital from other organizations or individuals to contribute capital; not to use funds from corporate bond issuance for capital contribution.

(2) Conditions for founding shareholders who are individuals

In addition to the provisions in point (1), founding shareholders who are individuals must comply with the following regulations:

- Possess Vietnamese nationality and have full civil capacity;

- Not fall under the subjects prohibited from establishing businesses according to the provisions of the Law on Enterprises 2020, Law on Cadres 2008, and other relevant legal regulations;

- Not to use mobilized capital, borrowed capital from other organizations or individuals to contribute capital; not to use funds from corporate bond issuance for capital contribution; not to contribute capital under the name of other individuals or legal entities in any form, except for the case of entrusted capital contribution, share purchase;

- Have been a manager of a profit-making business for at least 3 consecutive years before the year of applying for the license or have a university or postgraduate degree in finance, banking, economics, business administration, law, accounting, or auditing;

- Not convicted of offenses related to banking activities or other activities related to banking activities that have not had their criminal records expunged; not subject to administrative penalties in the monetary and banking field for violations regarding licenses, governance, management, shares, capital contribution, share purchasing, corporate bond buying within 5 consecutive years prior to the year of applying for the license and until submitting the supplementary application for the license.

(3) Conditions for founding shareholders who are organizations

In addition to the provisions in point 1, founding shareholders who are organizations must comply with the following regulations:

- Be established under Vietnamese law;

- Not to use mobilized capital, borrowed capital from other organizations or individuals to contribute capital; not to use funds from corporate bond issuance for capital contribution; not to contribute capital under the name of other individuals or legal entities in any form, except for the case of entrusted capital contribution or share purchase;

- Make a profit for 3 consecutive years before the year of applying for the license and until submitting the supplementary application for the license;

- Fulfill all tax and social insurance obligations until the time of applying for the license;

- Not convicted of crimes as prescribed in the Criminal Code 2015 within 2 consecutive years prior to the year of applying for the license and until submitting the supplementary application for the license for consideration;

- For organizations as Vietnamese enterprises (excluding Vietnamese commercial banks):

Have a minimum charter capital of 500 billion VND, a minimum total asset of 1,000 billion VND in 3 consecutive years before the year of applying for the license.

In case the enterprise operates in business fields requiring legal capital, the ownership capital according to the audited financial statement of the year immediately preceding the time of applying for the license must be ensured, minus the minimum legal capital with the committed capital amount;

In case the enterprise is licensed to establish and operate in the fields of securities and insurance, capital contribution must comply with regulations of the law on securities and insurance;

- For Vietnamese commercial banks:

+ Have a minimum total asset of 100,000 billion VND, comply with regulations on risk management and full provisioning according to regulations at the time of applying for the license and until submitting the supplementary application for the license;

+ Not violate limits and safety ratios in operations as prescribed by the State Bank in the year immediately preceding the application year for the license and until submitting the supplementary application for the license for consideration;

+ Ensure the minimum capital safety ratio after capital contribution to establish a non-bank credit institution;

+ Not subject to administrative penalties in the monetary and banking field in 2 consecutive years prior to the year of applying for the license and until the time of applying for the license and until submitting the supplementary application for the license for consideration.

Decree 162/2024/ND-CP comes into effect from December 20, 2024.

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