Instructions for settlement of share/stakes exceeding limits of commercial bank under special control in Vietnam

13:59, 20/04/2024

What are the regulations on settlement of share/stakes exceeding limits of commercial bank under special control in Vietnam? - Gia Khanh (HCMC)

Instructions for settlement of share/stakes exceeding limits of commercial bank under special control in Vietnam (Internet image)

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

On January 18, 2024, the National Assembly officially passed the Law on Credit Institutions 2024

Instructions for settlement of share/stakes exceeding limits of commercial bank under special control in Vietnam

According to Article 186 of the Law on Credit Institutions 2024, regulations on settlement of share/stakes exceeding limits are as follows:

- The transferee shall reduce holdings of shares/stakes at the transferred bank by increase in the charter capital, transfer of shares/stakes and other measures according to regulations of law in order to comply with the limits specified in Clause 2 and Clause 3 Article 63, Clause 1 Article 77 and Clause 2 Article 137 of the Law on Credit Institutions 2024 within the time limit specified in the mandatory transfer plan.

- If the regulations in Clause 1 of Article 186 of the Law on Credit Institutions 2024 cannot be applied, the transferee shall merge, amalgamate or dissolve the transferred bank.

- The settlement of shares/stakes mentioned in Clause 1 of Article 186 of the Law on Credit Institutions 2024 shall be carried out before the deadline specified in the approved mandatory transfer plan when all of the following conditions are satisfied:

+ Charter capital has been increased in accordance with the approved mandatory transfer plan;

+ It has been at least 01 year from the effective date of the decision on mandatory transfer.

* Clause 2 and Clause 3, Article 63 of the Law on Credit Institutions 2024 stipulates the holdings as follows:

- A shareholder that is an institution must not own shares whose value exceeds 10% of charter capital of a credit institution.

- A shareholder and related persons of such shareholder must not own shares whose value exceeds 15% of charter capital of a credit institution. A major shareholder of a credit institution and related persons of such major shareholder must not own shares whose value is 05% or more of charter capital of another credit institution.

* According to Clause 1, Article 77 of the Law on Credit Institutions 2024, a capital contributor of a credit institution that is a limited liability company with two or more members shall be juridical person. The total number of capital contributors shall not exceed 05. The maximum permissible holdings of a capital contributor or a capital contributor and his/her related persons shall not exceed 50% of charter capital of the credit institution.

Capital contribution and holdings of domestic and foreign institutions at microfinance institutions shall comply with regulations of the Governor of the State Bank.

* According to Clause 2, Article 137 of the Law on Credit Institutions 2024, the total capital contributed or shares purchased by a commercial bank to or from enterprises and credit institutions, including its subsidiaries and associate companies, under regulations of Clauses 2,3,4 and 8 Article 111 of the Law on Credit Institutions 2024 must not exceed 40% of its charter capital and reserve funds.

More details can be found in: The Law on Credit Institutions 2024 taking effect on July 1, 2024, except for Clause 3, Article 200 and Clause 15, Article 210 of the Law on Credit Institutions 2024, which takes effect on January 1, 2025. .

The Law on Credit Institutions 2010 as amended in the Law amending Law on Credit Institutions 2017 will no longer be effective from the date the Law on Credit Institutions 2024, except for the provisions in Clauses 1, 2, 3, 4, 8, 9, 12 and 14 Article 210 of the Law on Credit Institutions 2024.

To Quoc Trinh

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