Conditions for owners and founding members of microfinance organizations in Vietnam from January 1, 2025

Conditions for owners and founding members of microfinance organizations in Vietnam from January 1, 2025

The owner of a microfinance organization established in the form of a single-member limited liability company in Vietnam must ensure the following conditions:

- It must be a central level socio-political organization;

- It must have financial capability to contribute capital for establishing the microfinance organization and commit not to use entrusted capital, mobilized capital, or borrowed capital from other organizations or individuals to contribute capital; commit to financially support the microfinance organization to overcome difficulties in case of capital challenges or liquidity issues;

- It must not be a founding shareholder, owner, founding member, or strategic shareholder of another credit institution in Vietnam.

* The founding member of a microfinance organization that is a limited liability company with two or more members must ensure the following conditions:

- It must have at least one capital-contributing member that is a central level socio-political organization meeting the conditions stipulated in points b and c of clause 1 of this Article;

- It must have at least one capital-contributing member that is a legal entity which has or is directly involved in managing or operating a microfinance program or project that has been operating safely and sustainably for at least 3 consecutive years prior to the application for license; must not have been convicted of crimes as stipulated in the Criminal Code in the 2 consecutive years preceding the application for license and at the time of submission of additional documentation for license consideration;

* For other capital-contributing members that are legal entities:

They must be established in accordance with Vietnamese law;

They must not be founding shareholders, owners, founding members, or strategic shareholders of another credit institution in Vietnam; must not have been convicted of crimes as stipulated in the Criminal Code in the 2 consecutive years preceding the application for license and at the time of submission of additional documentation for license consideration;

They must have the financial capability to contribute capital to establish the microfinance organization and commit not to use entrusted capital, mobilized capital, or borrowed capital from other organizations or individuals to contribute capital; commit to financially support the microfinance organization to overcome difficulties in case of capital challenges or liquidity issues;

They must fulfill all obligations related to taxes and social insurance at the time of application for license;

They must not be administratively sanctioned in the monetary and banking sectors at the highest penalty level for violations related to licensing, management, operations, shares, stocks, capital contribution, share purchase, credit provision, corporate bond purchase, safety ratio as per legal regulations on handling administrative violations in the monetary and banking sectors in the 2 consecutive years preceding the application for license;

In case the founding member is an enterprise, it must operate profitably in the 3 consecutive years preceding the application for license;

In case the founding member is an enterprise operating in a business sector requiring statutory capital, it must ensure that equity minus statutory capital is at least equal to the committed capital contribution based on data from the audited financial report of the year preceding the application for license;

In case the founding member is an enterprise licensed to establish and operate in the banking, securities, or insurance sectors, it must comply with capital contribution regulations as per laws governing banking, securities, and insurance.

More details can be found in Decree 162/2024/ND-CP effective from December 20, 2024.

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