Requirements for establishment of representative offices of a non-bank credit institution in Vietnam

Requirements for establishment of representative offices of a non-bank credit institution in Vietnam (Internet image)

1. What is a representative office of a non-bank credit institution?

According to Clause 4, Article 3 of Circular 53/2018/TT-NHNN, representative office refers to a dependent unit of a non-bank credit institution that has its own seal and performs functions of a representative with the authorization of that non-bank credit institution. A representative office is not allowed to carry out business activities.

Specifically, non-bank credit institutions refer to general finance companies, factoring finance companies, consumer finance companies, and finance leasing companies. (Clause 1, Article 3 of Circular 53/2018/TT-NHNN)

2. Requirements for establishment of representative offices and administrative units in Vietnam

2.1. For non-bank credit institution that has been operated for at least 12 months

 A non-bank credit institution that has been operated for at least 12 months (counting from the date of inauguration to the application date) is required to satisfy the requirements specified in Points a, c, e, g, h, i Clause 1 Article 7 of Circular 53/2018/TT-NHNN.

Specifically, the conditions are as follows:

-  Its chartered capital in December 31 of the year preceding the year of application shall not be lower than the legal capital;

- It is not prohibited by a competent authority from expanding its operations at the application date;

- The number of members and structure of the Board of Directors, the Board of Members and the Boards of Controllers must comply with applicable laws at the application date; the General Director (or Director) position is not left vacant;

- It does not commit any violations against regulations on internal control system, internal auditing, and classification of assets and risk provisions at the application date;

- It has the Regulations on operating network management as regulated in Article 6 hereof;

- The scheme for establishment of network members is available.

(Clause 1, Article 8 of Circular 53/2018/TT-NHNN)

2.2. For non-bank credit institution that has been operated for less than 12 months in Vietnam

Specifically, in Clause 2, Article 8 of Circular 53/2018/TT-NHNN, a non-bank credit institution that has been operated for less than 12 months (counting from the date of inauguration to the application date) is required to satisfy the requirements specified in Points c, e, g, h, i Clause 1 and Point a Clause 2 Article 7 of Circular 53/2018/TT-NHNN.

-  It is not prohibited by a competent authority from expanding its operations at the application date;

- The number of members and structure of the Board of Directors, the Board of Members and the Boards of Controllers must comply with applicable laws at the application date; the General Director (or Director) position is not left vacant;

- It does not commit any violations against regulations on internal control system, internal auditing, and classification of assets and risk provisions at the application date;

- It has the Regulations on operating network management as regulated in Article 6 of Circular 53/2018/TT-NHNN;

- The scheme for establishment of network members is available.

3. Application for approval for establishment of representative office of a non-banking credit institution in Vietnam

 Application for approval for establishment of representative office of a non-banking credit institution in Vietnam includes:

- The application for the SBV’s approval for establishment of a branch/ representative office/ administrative unit made by the non-bank credit institution by using the form provided in the Appendix enclosed herewith.

- The resolution on approval for the establishment of a branch/ representative office/ administrative unit made by the Board of Directors, or the Board of Members of the non-bank credit institution, or other documents of equivalent validity made by other authorities of the non-bank credit institution as regulated in its Charter.

- The scheme for establishment of a representative office/ administrative unit, which includes, inter alia, the following contents:

+ Full name in Vietnamese language and in foreign language (if any); abbreviated name in Vietnamese language and foreign language (if any); address and operations;

+ Reasons and necessity of establishing the representative office/ administrative unit;

+ Expected holders of key positions (including Director, Deputy Director, heads of professional divisions, head of the representative office or administrative unit);

+ The operation plan for the first three years.

(Clause 1, 2 and 4 Article 9 of Circular 53/2018/TT-NHNN)

Thanh Rin

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