Holdings of foreign investors at Vietnamese credit institutions

Holdings of foreign investors at Vietnamese credit institutions (Internet image)

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

1. Holdings of foreign investors at Vietnamese credit institutions

Holdings of foreign investors at Vietnamese credit institutions according to Article 7 of Decree 01/2014/ND-CP is as follows:

- The holding of a foreign individual shall not exceed 5% of charter capital of a Vietnamese credit institution.

- The holding of a foreign organization shall not exceed 15% of charter capital of a Vietnamese credit institution except for the case specified at Clause 3 Article 7 of Decree 01/2014/ND-CP.

- The holding of a foreign strategic investor shall not exceed 20% of charter capital of a Vietnamese credit institution.

- The holding of a foreign investor and the concerned persons of such foreign investor shall not exceed 20% of charter capital of a Vietnamese credit institution.

- Total shareholding level of foreign investors shall not exceed 30% of charter capital of a Vietnamese commercial bank. Total shareholding level of foreign investors at a Vietnamese non-banking credit institution shall comply with legislation applicable to public companies and listing companies.

- In special case, to perform restructure of credit institution which is weak and faces to difficulties, to ensure credit safety of credit institution system, the Prime Minister shall decide the holding of a foreign organization, a foreign strategic investor, total shareholding level of foreign investors at a weak and restructured joint-stock credit institution, in excess of limit specified at Clauses 2, 3, 5 Article 7 of Decree 01/2014/ND-CP for each specific case.

- The holdings specified at Clauses 1, 2, 3, 4, 5, 6 of Article 7 of Decree 01/2014/ND-CP include the capital amount which foreign investor entrusted for other organizations and individuals to purchase shares.

- Foreign investors changing convertible bonds of Vietnamese credit institutions into stocks must adhere to the holdings and holding conditions prescribed in Decree 01/2014/ND-CP.

2. Forms of share purchase for foreign investors at Vietnamese credit institutions

Forms of share purchase for foreign investors at Vietnamese credit institutions according to Article 6 of Decree 01/2014/ND-CP are as follows:

- Foreign investors purchase shares of shareholders of joint-stock credit institutions.

- Foreign investors purchase shares in case where joint-stock credit institutions sell shares to increase charter capital or sell treasury shares.

- Foreign investors purchase shares in case where credit institutions transform the legal form into joint-stock credit institutions.

3. Competence, orders, procedures and dossier in case of foreign investors' purchase of shares of Vietnamese credit institutions

Competence, orders, procedures and dossier in case of foreign investors' purchase of shares of Vietnamese credit institutions according to Article 8 of Decree 01/2014/ND-CP are as follows:

- Case of share purchase that leads the shareholding level to be 10% or more of charter capital; share purchase and becoming foreign strategic investor of a Vietnamese credit institution:

= The Vietnamese credit institution (for credit institution which has not yet listed its shares) or foreign organization (for credit institution which has listed its shares) shall make a dossier and send directly or via post, electronic network to the State bank of Vietnam for acceptance before performing transactions.

= Within 40 days after receiving full and valid dossier, based on conditions specified in Articles 9 and 10 of Decree 01/2014/ND-CP, the State bank of Vietnam shall consider and decide on acceptance or refusal in writing for foreign organizations' share purchase. In case of refusal, the State bank of Vietnam shall state clearly reason thereof.

- In case of share purchase that leads the shareholding level to be 5% or more of charter capital and additional share purchase when a foreign organization has owned 5% or more of charter capital of a Vietnamese credit institution except for case specified at Clause 1 this Article, foreign investors shall comply with the process and procedures specified at Clause 2 Article 29 of Law on credit institutions.

- Other cases of share purchase, except for cases specified in Clauses 1 and 2 of Article 8 of Decree 01/2014/ND-CP:

= Foreign investors purchase shares of Vietnamese credit institutions which have not yet listed shares shall make dossier and send it, directly or via post, to the Vietnamese credit institutions for decision in order to ensure compliance with Article 7 of Decree 01/2014/ND-CP

The Vietnamese credit institutions shall specify dossier of foreign investors' purchase of shares in conformity with legislations.

Within 20 working days, after receiving a full and valid dossier, the Vietnamese credit institutions must reply in writing to foreign investors. In case of refusal, the Vietnamese credit institutions must state clearly reason thereof.

= Foreign investors may purchase shares of joint-stock credit institutions which have listed shares in accordance with legislations on securities and securities market and must comply with provision in Article 7 of Decree 01/2014/ND-CP.

- The State bank of Vietnam shall certify the process of, procedures for and dossier of foreign investors’ purchase of shares of Vietnamese credit institutions specified at Clauses 1, 2 of Article 8 of Decree 01/2014/ND-CP.

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