Latest conditions for founding shareholders of a joint stock commercial bank in Vietnam

Latest conditions for founding shareholders of a joint stock commercial bank in Vietnam​ (Image from the internet)

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, micro-financial organizations, and conditions for owners of credit institutions as one-member limited liability companies, founding shareholders, and founding members.

Latest conditions for founding shareholders of a joint stock commercial bank in Vietnam

According to Article 4 of Decree 162/2024/ND-CP, the conditions for founding shareholders of a joint stock commercial bank in Vietnam are as follows:

(1) Must not be founding shareholders, owners, founding members, or strategic shareholders of another credit institution.

(2) The founding shareholders must together own at least 50% of the charter capital when establishing the joint stock commercial bank, in which the founding shareholders that are legal entities must together own at least 50% of the total shares of the founding shareholders but not exceed the share ownership ratio prescribed in Article 63 of the Law on Credit Institutions.

(3) In addition to the conditions mentioned above, individual founding shareholders must meet the following conditions:

- Have Vietnamese nationality, possess full civil act capacity;

- Must not belong to the categories prohibited under the Law on Enterprises, the Law on Officials, and other relevant legal regulations;

- Must not use mobilized capital, borrowed capital from other organizations or individuals to contribute capital; must not use capital sourced from the issuance of corporate bonds to contribute capital; must not contribute capital under the name of another individual or legal entity in any form, except in the case of entrusted capital contribution or share purchase;

- Must be a manager of a profit-making business for at least 03 consecutive years before the year of submitting the application for a license, or possess a university degree or higher in finance, banking, economics, business management, law, accounting, or auditing;

- Must not have been convicted of violations regarding banking activities or other activities related to banking that have not been expunged; must not have been administratively sanctioned for violations in the monetary and banking sector regarding licenses, management, operation, shares, securities, capital contributions, share purchases, corporate bond purchases in the 05 consecutive years prior to the year of submitting the application for a license and up to the time of submitting the additional application for consideration of license grant.

(4) Besides the conditions specified above, founding shareholders that are organizations must fulfill the following conditions:

- Must be established under the laws of Vietnam;

- Must not use mobilized capital, borrowed capital from other organizations or individuals to contribute capital; must not use capital raised through corporate bond issuance to contribute capital; must not contribute capital under the name of another individual or legal entity in any form, except in the case of entrusted capital contribution or share purchase;

- Must fulfill all tax and social insurance obligations up to the time of submitting the application for a license;

- Must have a minimum owner equity of 500 billion VND in the 05 consecutive years before submitting the application for a license and up to the time of submitting the additional application for consideration of license issuance;

- Must have engaged in profit-making activities in the 05 consecutive years prior to submitting the application for a license and up to the time of submitting the additional application for consideration of license issuance;

- In the case of businesses operating in industries requiring statutory capital, owner equity must exceed statutory capital by at least the amount of committed capital contribution according to the financial statement audited in the year prior to submitting the application for a license;

- If a state-owned enterprise, must be permitted to participate in capital contribution according to legal regulations;

- If an organization licensed to establish and operate in the sectors of banking, securities, or insurance, it must comply with legal regulations regarding capital contribution in these sectors;

- Must not have been convicted of offenses stipulated in the Criminal Code in the 02 years prior to submitting the application for a license and up to the time of submitting the supplementary application for consideration of license issuance;

- In the case of commercial banks:

Must have a minimum total asset value of 100,000 billion VND, fully comply with risk management and provisioning regulations at the time of submitting the application for a license and up to the time of submitting the additional application for consideration of license issuance;

Must not violate safety assurance ratios in banking activities as stipulated by the State Bank in the year prior to submitting the application for a license and up to the time of submitting the additional application for consideration of license issuance;

Must adhere to conditions and limits on purchase and holding of credit institution shares as prescribed in Clause 8, Article 111 of the Law on Credit Institutions;

Must ensure a minimum capital adequacy ratio after capital contribution to establish the joint stock commercial bank;

Must not be administratively sanctioned in the monetary and banking sector, and must not have been convicted of offenses stipulated in the Criminal Code in the 02 years prior to submitting the application for a license and up to the time of submitting the additional application for consideration of license issuance.

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