Vietnam’s new regulation on transformation of financial companies

According to Decree No. 39/2014/NĐ-CP of Vietnam’s Government, financial companies are understood as follows:

- General financial company means a financial company which may perform activities prescribed in the Law on Credit Institutions and this Decree.

- Specialized financial companies include factoring financial companies, consumer credit financial companies and financial leasing companies as defined in this Decree and guided by the State Bank of Vietnam (below referred to as the State Bank).

- Factoring financial company means a specialized financial company mainly engaged in factoring activities under this Decree.

- Consumer credit financial company means a specialized financial company mainly engaged in consumer credit activities under this Decree.

- Financial leasing company means a specialized financial company mainly engaged in financial leasing under this Decree. Financial leasing debit balance must make up at least 70% of the total credit balance.

Transformation of financial companies must comply with the following provisions:

- General financial companies may add or modify contents of their operation under this Decree to be transformed into specialized financial companies.

- Specialized financial companies may not add contents of operation to be transformed into general financial companies.

- Based on results of the State Bank’s inspection, examination and supervision and in the course of restructuring of financial companies, the State Bank shall decide on the merger or transformation of financial companies.

View more details at Decree No. 39/2014/NĐ-CP of Vietnam’s Government, effective from June 25, 2014.

Le Hai

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