Latest guidance on the repurchase of stakes from non-banking credit institutions in Vietnam

Latest guidance on the repurchase of stakes from non-banking credit institutions in Vietnam (Image from the Internet)

1. Latest guidance on the repurchase of stakes from non-banking credit institutions in Vietnam in Vietnam

According to the provisions of Clause 5, Article 13 Circular 35/2024/TT-NHNN, non-banking credit institutions limited liability repurchasing stakes must meet the following regulations:

- Conditions for payment and handling of stakes according to the repurchase request of the contributing member shall be implemented according to the regulations on capital contribution repurchase in the Enterprise Law 2020;

- After fully paying off the repurchased contribution, non-banking credit institutions ensure to pay off all other debts and financial obligations, comply with safety ratios in banking operations, ensuring the real value of capital is not lower than the prescribed capital;

- Fully comply with risk management regulations and make full provisions according to the regulations at the time of requesting approval from the State Bank of Vietnam for the repurchase of stakes;

- Maintain continuous profitability for 05 consecutive years prior to the repurchase proposal and have no acceleration plans;

- Have not been subjected to administrative penalties by the State Bank in the monetary and banking operations sector for 05 consecutive years prior to the year of the repurchase proposal and up to the time of requesting approval from the State Bank of Vietnam for the repurchase of stakes.

2. Principles of replacement of licenses and addition of business lines to licenses in Vietnam

The principles of replacement of licenses and addition of business lines to licenses in Vietnam are stipulated in Article 5 Circular 35/2024/TT-NHNN as follows:

- The State Bank does not license changes to the license for activities that non-banking credit institutions are not allowed to perform according to the law at the time of the license change.

- The State Bank adjusts the names of activities allowed to be performed in accordance with the provisions of the Credit Institutions Law 2024 and the Appendices issued together with Circular 35/2024/TT-NHNN. A new license replaces all previous licenses and approval documents (relating to amendments and supplements to the License) issued by the State Bank to non-banking credit institutions before the time of the change.

- For foreign exchange business activities, providing foreign exchange services, the supplementation of activities into the License is implemented according to the separate regulations of the State Bank and other relevant laws.

- For other prescribed activities and other business activities related to banking operations stipulated in the Appendices issued together with Circular 35/2024/TT-NHNN, non-banking credit institutions may perform them after being approved by the State Bank; the procedures for and supplementation of these activities into the License shall be implemented according to the separate regulations of the State Bank and other relevant laws.

- In case a non-banking credit institution proposes to supplement activities into the License while simultaneously requesting a license change, the State Bank of Vietnam shall consider issuing a new license including the proposed additional activities, based on the institution's full compliance with the preliminary documentation requirements as stipulated in Clause 3, Article 7 Circular 35/2024/TT-NHNN.

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