Regulations on transfer and return of contributed capital to people’s credit funds in Vietnam from July 1, 2024

Regulations on transfer and return of contributed capital to people’s credit funds in Vietnam from July 1, 2024 (Image from the Internet)

On June 28, 2024, the Governor of the State Bank of Vietnam issued Circular 29/2024/TT-NHNN on people’s credit funds in Vietnam.

Regulations on transfer and return of contributed capital to people’s credit funds in Vietnam from July 1, 2024

According to Article 12 of Circular 29/2024/TT-NHNN, the guidelines on transfer and refund of contribution capital to people’s credit funds in Vietnam are as follows:

* Each member is entitled to transfer a part or all of their stakes to other member(s). A member’s transfer of stakes is subject to the approval of the Board of Directors and the following provisions in Vietnam:

- The remaining contribution capital (in case of partial transfer) must meet the membership contribution capital requirements as defined in Clauses 1 and 2, Article 10 of Circular 29/2024/TT-NHNN;

- The transfer of the entire contribution capital can only be executed after the member has fulfilled their debt repayment obligations and other financial obligations to the people's credit fund as prescribed by law and the charter of the people's credit fund;

- Members receiving the transferred contribution capital must meet the maximum contribution capital threshold for a member as stipulated in Clause 2, Article 10 of Circular 29/2024/TT-NHNN.

* The people's credit fund refunds part of the contribution capital to members when terminating their membership status or refunding the excess contribution capital over the maximum threshold defined in Clause 2, Article 10 of Circular 29/2024/TT-NHNN and the charter of the people's credit fund.

* Return of contributed capital to members must meet the following conditions:

- For the member: The member has fulfilled all their financial obligations to the people's credit fund, including:

+ Repayment of debts (both principal and interest);

+ Compensation for losses incurred by the member;

+ Losses in business activities or operational risks proportional to the member's contribution as determined by the General Assembly of Members;

- For the people's credit fund:

+ The real value of the fund's charter capital must not fall below the legal capital level;

+ Compliance with the regulations on minimum capital safety ratios, deposit reception ratios from members, or investments in fixed assets before and after the refund of contribution capital to members;

+ The refunded contribution capital in the case of entire contribution refund is calculated as follows:

A = B - C

Where:

A: Contribution capital refunded to the member.

B: Total contribution capital defined as member status and additional contribution as per Clause 1, Article 10 of Circular 29/2024/TT-NHNN.

C: Financial obligations to be fulfilled by the member as per Point a, Clause 3, Article 9 of Circular 29/2024/TT-NHNN.

* The refund of contribution capital when a member terminates their membership status as per Point c, Clause 1, Article 9 of Circular 29/2024/TT-NHNN must be approved by the General Assembly of Members.

The refund of contribution capital when a member terminates their membership status as per Points a(i), a(ii), a(iii), and b, Clause 1, Article 9 of Circular 29/2024/TT-NHNN shall be decided by the Board of Directors and reported to the General Assembly of Members at the nearest meeting.

* Monthly, no later than the 5th of the following month, the people's credit fund must report to the State Bank branch in the province or centrally-run city where the people's credit fund's headquarters is located (hereinafter referred to as the State Bank branch) regarding the transfer of contribution capital from members with a contribution ratio of 5% to 10% of the fund's charter capital.

More details can be found in Circular 29/2024/TT-NHNN, which comes into force in Vietnam from July 1, 2024.

To Quoc Trinh

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE