Conditions for owners and founding members of microfinance organizations in Vietnam

Conditions for owners and founding members of microfinance organizations in Vietnam​ (Image from the Internet)

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

Conditions for owners and founding members of microfinance organizations in Vietnam​

According to the provisions of Article 13 of Decree 162/2024/ND-CP, the conditions for owners and founding members of microfinance organizations are as follows:

- The owner of a microfinance organization established in the form of a one-member limited liability company must ensure the following conditions:

+ It is a central-level socio-political organization;

+ Has the financial capability to contribute capital to establish a microfinance organization and commits not to use entrusted capital, mobilized capital, or loans from other organizations or individuals to contribute capital; commits to support the microfinance organization financially to resolve difficulties in case of capital or liquidity issues;

+ Is not a founding shareholder, owner, founding member, or strategic shareholder of another credit institution in Vietnam.

- The founding member of a microfinance organization, which is a limited liability company with two or more members, must ensure the following conditions:

+ There is at least one capital-contributing member who is a central-level socio-political organization meeting the conditions stipulated at points b and c of clause 1, Article 13 of Decree 162/2024/ND-CP;

+ There is at least one capital-contributing member who is a legal entity that has directly participated in managing or operating a microfinance program or project safely and sustainably for at least 3 consecutive years prior to the date of application for the license; has not been convicted of crimes stipulated in the Criminal Code 2015 within the two consecutive years preceding the year of submitting the application for a license and up to the time of submitting the supplementary application for consideration to issue a license;

+ Other capital-contributing members are legal entities:

Formed  according  to  the  laws  of  Vietnam;

Are  not  founding  shareholders,  owners,  founding  members,  or  strategic  shareholders  of  another  credit  institution  in  Vietnam;  have  not  been  convicted  of  crimes  stipulated  in  the  Criminal  Code  2015  within  the  two  consecutive  years  preceding  the  submission  of  the  application  for  a  license  and  up  to  the  time  of  submitting  the  supplementary  application  for  consideration  to  issue  a  license;

Have  the  financial  capability  to  contribute  capital  to  establish  a  microfinance  organization  and  commits  not  to  use  entrusted  capital,  mobilized  capital,  or  loans  from  other  organizations  or  individuals  to  contribute  capital;  commits  to  support  the  microfinance  organization  financially  to  resolve  difficulties  in  case  of  capital  or  liquidity  issues;

Fulfill  all  obligations  related  to  taxes  and  social  insurance  up  to  the  time  of  submitting  the  application  for  a  license;

Have  not  been  administratively  penalized  in  the  field  of  monetary  and  banking  at  the  highest  penalty  frame  for  violations  regarding  licenses,  management,  administration,  shares,  stock,  capital  contribution,  share  purchase,  credit  granting,  corporate  bond  purchase,  safety  assurance  ratios  as  prescribed  by  the  laws  on  administrative  violations  handling  in  the  field  of  monetary  and  banking  within  two  consecutive  years  prior  to  the  time  of  submitting  the  application  for  a  license;

In the case that the founding member is a business, it must be profitable for three consecutive years before the year of submitting the application for a license;

If the founding member is a business operating in an industry that requires statutory capital, it must ensure that its owner's equity minus statutory capital at least equals the committed capital contribution according to figures from the audited financial report of the year immediately preceding the time of submitting the application for a license;

If the founding member is a business granted a license to establish and operate in the fields of banking, securities, or insurance, it must comply with capital contribution regulations under the legal provisions for banking, securities, and insurance.

For further details, refer to Decree 162/2024/ND-CP, effective from December 20, 2024.

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