Application for approval for establishment of a branch, representative office or administrative unit in Vietnam

Application for approval for establishment of a branch, representative office or administrative unit in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

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

According to Clause 3, Article 3 of Circular 53/2018/TT-NHNN, branch refers to a dependent unit of a non-bank credit institution that has its own seal and performs one or some functions of the non-bank credit institution in accordance with its internal regulations and applicable laws.

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. Application for approval for establishment of a branch, representative office or administrative unit in Vietnam

Specifically, in Article 9 of Circular 53/2018/TT-NHNN, the application for approval for establishment of a branch, representative office or administrative unit 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 branch establishment, which includes, inter alia, the following contents:

+ Full name and abbreviated name in Vietnamese language, branch’s address and operations;

+ Reasons for establishing the branch and selected location of the branch;

+ Organizational structure: Organizational structure of the branch, expected holders of key positions (including Director, Deputy Director and heads of professional divisions);

+ The feasibility study report which includes analysis of business environment, target market, business opportunities and plans for market domination;

+ The business plan for the first three years, which includes, inter alia, the following contents: Planned balance sheet; income statement; grounds for formulating the business plan and explanations about the capacity to implement the business plan in each year.

-. 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.

3. Cases of termination of operation or dissolution of branches in Vietnam

A branch shall have its operations terminated or shall be dissolved in the following circumstances:

- Implicit termination of operation or dissolution;

- Voluntary termination of operation or dissolution; or

- Compulsory termination of operation or dissolution.

(Clause 1, Article 16 of Circular 53/2018/TT-NHNN)

4. Responsibilities of a non-banking credit institution when a branch ceases to operate or is dissolved in Vietnam

According to Clause 2, Article 16 of Circular 53/2018/TT-NHNN, the related non-bank credit institution shall:

- Settle issues concerning assets, rights, obligations and related benefits of the branch, transaction office, representative office or administrative unit that has its operation terminated or that is dissolved in accordance with applicable laws;

- Keep documents, vouchers and other papers of the branch, representative office or administrative unit that has its operation terminated or that is dissolved and all documents concerning such termination of operation or dissolution;

- Carry out legal procedures for termination of operation or dissolution of the branch, representative office or administrative unit in accordance with applicable laws.

Thanh Rin

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