Law amending and supplementing the Law on Credit Institutions has just been passed by the National Assembly; accordingly, the Law prescribes the following new noteworthy contents:
Article table of contents
1. Detailed regulations on 5 restructuring plans for specially controlled credit institutions include:
- Recovery plan.- Merger, consolidation, transfer of entire shares, contributed capital plan.- Dissolution plan.- Mandatory transfer plan.- Bankruptcy plan.
2. Additional cases for revoking the License of Credit Institutions.
In addition to cases of division, separation, merger, consolidation, dissolution, bankruptcy, the State Bank will revoke the Operating License of a Credit Institution when the Credit Institution transforms its legal form.
3. Credit institutions temporarily suspending business activities for more than 5 working days must be approved by the State Bank.
The Law amending and supplementing the Law on Credit Institutions increases the number of days a temporary business suspension must be approved by the State Bank to more than 5 working days, whereas the current regulation is more than 1 working day.
4. Credit institutions with shares listed on the domestic stock market do not need the approval of the State Bank.
5. Replace the phrase "must register the new Charter at the State Bank" with the phrase "send the new Charter to the State Bank" in Clause 3, Article 31 and Clause 2, Article 77.
6. Addition of cases not allowed to hold positions.
Those responsible according to the inspection conclusions that caused the Credit Institution, foreign bank branch to be administratively sanctioned at the highest fine level, shall not hold positions in the Credit Institution.
7. Additional cases of not simultaneously holding positions.
The Chairman of the Board of Directors, Chairman of the Members' Council, General Director (Director) of a credit institution shall not concurrently be the Chairman of the Board of Directors, member of the Board of Directors, Chairman of the Members' Council, member of the Members' Council, company chairman, General Director (Director), Deputy General Director (Deputy Director) or equivalent positions of other enterprises.
8. Change in the criteria to become a member of the Board of Directors of a Credit Institution.
Abolish the criterion: "Be an individual owner or authorized representative owning at least 5% of the charter capital of the credit institution."
9. Amend the criteria to become the General Director (Director) of a Credit Institution.
Candidates to become the General Director of a Credit Institution must have practical working time meeting one of the following conditions:
- At least 5 years being an executive officer of a Credit Institution.- At least 5 years being a General Director (Director), Deputy General Director (Deputy Director) of an enterprise with an owner's equity at least equal to the legal capital level for the corresponding type of credit institution and at least 5 years working directly in finance, banking, accounting, auditing.- At least 10 years working directly in finance, banking, accounting, auditing.
10. Addition of obligations for common shareholders in a joint-stock company.
Common shareholders in Credit Institutions that are joint-stock companies are obliged:
- Not to use capital sourced from the credit institution, foreign bank branch to buy, receive the transfer of shares of the credit institution.- Not to contribute capital, purchase shares of the credit institution under another individual's or legal entity's name in any form, except in cases of entrusted according to legal regulations.
11. Addition of cases allowed to own more than 15% of charter capital for institutional shareholders.
Institutional shareholders are allowed to own more than 15% of charter capital when owning shares of Credit Institutions in subsidiaries, affiliated companies as specified in Clause 2 and Clause 3, Article 103, Clause 3, Article 110 of the Law on Credit Institutions.
12. Detailed regulations on shareholding ratios for shareholders and those related to shareholders.
- Shareholders and related persons of shareholders are allowed to own shares exceeding 20% of the charter capital of a Credit Institution in cases specified in points a, b, and c, Clause 2, Article 55 of the Law on Credit Institutions.- Major shareholders of a Credit Institution and related persons of that shareholder shall not own shares from 5% or more of the charter capital of another credit institution.
13. Credit granted to a client includes the total amount purchased, investments in bonds issued by that client, and related persons of that client.
14. Equity contributions, share purchases by a commercial bank and its subsidiaries, affiliated companies in an enterprise do not include the equity contributions, share purchases of a fund management company that is a subsidiary or affiliated company of the commercial bank, finance companies in an enterprise from funds managed by that company.
15. Early intervention for credit institutions, foreign bank branches.
The State Bank considers early intervention for a credit institution falling into one of the following cases but has not been placed under special control:
- Failing to maintain the capital safety ratio specified in point b, Clause 1, Article 130 of the Law on Credit Institutions for 6 consecutive months.- Failing to maintain the liquidity ratio for 3 consecutive months.- Rated below average according to regulations of the State Bank.
16. Credit institutions, foreign bank branches are responsible for promptly reporting in writing to the State Bank when:
- Changing the name of a branch of the credit institution.- Temporarily suspending business activities for less than 5 working days.- Listing shares on the domestic stock market.
17. Amend provisions on terminating special control over credit institutions.
The State Bank considers and decides to terminate special control over a credit institution under special control in one of the following cases:
- The credit institution under special control has overcome the situation leading to its placement under special control and complies with the safety ratios stipulated in Article 130 of the Law.- During special control, the credit institution under special control is merged, consolidated into another credit institution or is dissolved.- After the Judge appoints the receiver or asset management, liquidation enterprise to handle the bankruptcy procedures for the credit institution under special control.
The Law amending and supplementing a number of articles of the Law on Credit Institutions takes effect from January 15, 2018.
