Circular No. 01/NH-TT guiding the implementation of the Regulation on the establishment and operation of representative offices of foreign economic organizations in Vietnam for foreign banks and credit institutions.

CIRCULAR

OF THE STATE BANK OF VIETNAM

Guidelines for Implementation

"Regulations on the establishment and operation of representative offices of foreign economic organizations in Vietnam" for foreign commercial banks and credit institutions

Pursuant to Decree No. 82/CP dated August 2, 1994 of the Government promulgating the Regulations on the establishment and operation of representative offices of foreign economic organizations in Vietnam and Decree No. 179/CP dated November 2, 1994 of the Government amending and supplementing the aforementioned Regulations (hereinafter referred to as the Regulations),

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After exchanging opinions with relevant ministries, sectors, and localities, the State Bank of Vietnam provides specific guidance on certain points in the Regulations for uniform implementation as follows:

1. The subjects eligible for the State Bank of Vietnam to grant permission to establish representative offices:

 1.1. Credit institutions and foreign banks stipulated in the Regulations shall be understood as organizations operating in the monetary-banking sector according to the business license issued by the competent authority of their home country, including:

Commercial banks;

Investment banks;

Financial companies;

Other organizations operating in the monetary-banking sector.

1.2. Credit institutions and foreign banks (hereinafter referred to as credit institutions) if they have a request to establish a representative office in Vietnam to establish banking, trade, and investment relations with Vietnamese economic organizations and meet the conditions specified in Article 2 of the Regulations and this Circular will be considered for permission to establish a representative office in Vietnam.

A credit institution may establish a representative office (hereinafter referred to as RO) in several provinces and cities of Vietnam, but in each province and city, only one RO is allowed per credit institution and each RO must have its own responsible person.

2. Conditions for being eligible for the State Bank of Vietnam to grant permission to establish a representative office (hereinafter referred to as the Permit):

2.1. The conditions for credit institutions to obtain a permit as stipulated in Article 2 of the Regulations shall be understood as follows:

The credit institution must be established in accordance with the laws of its home country, according to the business license issued by the competent authority of its home country;

The credit institution must have been operating for at least five years in its home country and be a reputable credit institution;

The credit institution has a need to understand the Vietnamese market and establish cooperation relations with Vietnamese economic organizations in the fields of banking, trade, and investment.

2.2. Credit institutions will not be considered for a permit in the following cases:

The credit institution does not meet the conditions specified in point 2.1 above;

The credit institution already has a branch operating in the province or city where it requests to establish a RO;

The parent credit institution or another credit institution within the same group is already operating in the area where the credit institution requests to establish a RO.

3. Scope of activities:

The RO of a credit institution is only permitted to perform the following tasks:

To serve as a liaison office and conduct market research;

To promote the establishment of projects by the credit institution in Vietnam;

To facilitate and monitor the implementation of contracts and agreements signed between the credit institution and Vietnamese credit institutions and businesses, and projects funded by the credit institution in Vietnam in compliance with Vietnamese law.

The RO is not permitted to engage in business or profit-making services in Vietnam under any form.

4. Procedures for granting the Permit to establish a RO:

4.1. Credit institutions requesting to establish a RO in Vietnam must submit to the State Bank of Vietnam a set of documents including:

4.1.1. A request to establish a RO in Vietnam signed by the Chairman of the Board of Directors (content according to Model No. 1 attached to this Circular) and the signature must be confirmed by the competent authority of the home country;

4.1.2. A copy of the business license of the credit institution issued by the competent authority of the home country (confirmed by a competent notary public in the home country);

4.1.3. A summary of the cooperation process of the credit institution with Vietnamese economic organizations in the fields of investment, trade, and banking;

4.1.4. The charter of the credit institution (one copy in English);

4.1.5. Annual reports of the credit institution's home country for the last three years (one set in English);

4.1.6. The documents mentioned in points 4.1.1 to 4.1.3 above must be prepared in two copies: one in English and one in Vietnamese. The Vietnamese translation must be confirmed by a competent notary public in Vietnam.

4.2. Credit institutions must submit three sets of documents to the State Bank of Vietnam, including one set as specified in point 4.1 and two sets of photocopies of this set.

4.3. The above documents must be directly submitted or authorized (by written authorization) to a business service organization established in accordance with Vietnamese law to transfer to the State Bank of Vietnam (in Hanoi).

4.4. The date when the complete and valid documents as specified in points 4.1 and 4.2 are received will be confirmed in writing by the State Bank of Vietnam for the credit institution.

4.5. Upon receipt of the complete documents as specified in point 4.1 and 4.2 submitted by the credit institution:

4.5.1. The State Bank of Vietnam sends a letter seeking opinions from relevant state management agencies and the People's Committee of the province or city where the RO will be headquartered.

4.5.2. Within twenty days from the date of sending the opinion exchange letter, if no reply is received from the relevant agencies, the State Bank of Vietnam will still consider and decide whether to grant or deny the Permit to the credit institution to ensure compliance with the deadline specified in Article 6 of the Regulations.

4.5.3. Within thirty days from the date of receiving the complete and valid documents, the State Bank of Vietnam will notify the decision to the credit institution that has applied to establish a RO in Vietnam.

4.6. After granting the Permit to the credit institution, the State Bank of Vietnam will send a copy of the Permit to the People's Committee of the province or city where the RO is permitted to be headquartered.

4.7. The Permit granted to the credit institution (according to Model No. 2 attached to this Circular) is valid for three years from the date of issuance.

5. Regarding the obligations and rights of the RO:

5.1. Within ten days after receiving the Permit (for the first time or renewal), the credit institution must pay a fee to the State Bank of Vietnam at the rate prescribed by the Ministry of Finance of Vietnam.

5.2. The RO is only permitted to carry out activities as specified in the content and duration of the Permit and registration of operations; the RO is not allowed to sublet premises, houses, and cannot act as a representative for other organizations in Vietnam; it is not allowed to transfer the Permit to any other organization or individual.

5.3. The Head of the Representative Office and employees working at the Representative Office do not have the authority to enter into economic contracts with Vietnamese enterprises. The Head of the Representative Office may only sign contracts when authorized legally (in writing) by the competent authority of the Foreign Commercial Bank and must report and provide the Central Bank with a copy of the authorization letter (certified by a notary public of the home country) for monitoring purposes.

5.4. The Representative Office may lease premises, housing, and means of transportation necessary for its operations and living activities in accordance with the current laws of Vietnam.

5.5. The Representative Office must register with the People's Committee of the province or city where it is located regarding the number of foreign nationals working at the Representative Office (including both foreign nationals and Vietnamese citizens residing abroad) as specified in the License; the number of Vietnamese nationals working at the Representative Office, and shall be responsible for facilitating the fulfillment of individual income tax obligations by those working at the Representative Office in accordance with the law.

5.6. The Representative Office must purchase compulsory insurance types as stipulated in Article 14 of the Regulation and guidelines issued by the Ministry of Finance of Vietnam.

5.7. The Representative Office may only open a dedicated disbursement account (in foreign currency or in Vietnamese Dong with a foreign currency base) at a bank established and operating in Vietnam, and such account can only be used to cover the Representative Office’s operational expenses.

5.8. The Representative Office may import into Vietnam items necessary for its work and living needs, but must pay taxes according to the current Law on Export and Import Duties in Vietnam and must follow the procedures for importation as prescribed by the General Department of Customs.

5.9. The Representative Office of a Foreign Commercial Bank in Vietnam shall have a separate seal in accordance with the regulations of the Ministry of Home Affairs of Vietnam and may only use this seal in transaction documents within the scope of the Representative Office’s functional authority in Vietnam.

6. Regarding registration and commencement of operations of the Representative Office:

6.1. Within a maximum period of ninety days from the date of issuance of the License or fifteen days from the date of extension of the License, the Foreign Commercial Bank must submit to the People's Committee of the province or city where the Representative Office is located a registration dossier for operations including:

6.1.1. A registration form for operations (according to Form No. 3 of this Circular);

6.1.2. Lease agreements for premises and related documents;

6.1.3. Employment contracts for staff in Vietnam and related documents;

6.1.4. A document appointing the Head of the Representative Office by the competent authority of the Foreign Commercial Bank;

6.1.5. Curriculum vitae of the Head of the Representative Office and staff working at the Representative Office.

6.2. Within ten days from the date of receiving approval for registration of operations from the People's Committee of the province or city where the Representative Office is located, the Representative Office must send a copy of the registration form to the State Bank of Vietnam (Department of Financial Institutions).

6.3. Within six months from the date the State Bank of Vietnam issues the License, the Representative Office must commence operations and must notify the State Bank of Vietnam and the People's Committee of the province or city concerned of the date of commencement of operations. In exceptional cases where it is not possible to commence operations on time, the Representative Office may request the State Bank of Vietnam to consider extending the date of commencement of operations.

7. Changes to the contents of the License, extension of the License, and termination of operations of the Representative Office:

7.1. Changing the name of the Representative Office:

The Representative Office may change its name if the Foreign Commercial Bank has changed its name in compliance with the laws of the country where it was established. The Representative Office must report and seek permission from the State Bank of Vietnam, and may only change its name upon written approval from the State Bank of Vietnam.

In the case of merger or capital contribution to establish a new Foreign Commercial Bank with a new name and functions, if the Foreign Commercial Bank wishes to set up a Representative Office in Vietnam, it must comply with the provisions of this Circular.

7.2. Increasing the number of staff working at the Representative Office: The Representative Office may only increase the number of foreign nationals working at the Representative Office upon written approval from the State Bank of Vietnam. The Representative Office must also register with the People's Committee of the province or city regarding the number of Vietnamese nationals working at the Representative Office.

7.3. Extension of the License:

When there is a need to extend the License, the Foreign Commercial Bank must submit to the State Bank of Vietnam thirty days before the expiration date of the License, a dossier including:

A request for extension of the License signed by the Chairman of the Board of Directors of the Foreign Commercial Bank (one original in English, one original in Vietnamese);

A summary report on the operations of the Representative Office during the validity period of the License signed by the Head of the Representative Office (one original in English, one original in Vietnamese);

The annual report of the parent bank in the previous year (one original in English);

Opinion The opinion of the People's Committee of the province or city where the Representative Office is located regarding the extension.

7.4. Changing the Head of the Representative Office and staff working at the Representative Office:

When there is a need to change the Head of the Representative Office or staff working at the Representative Office, the Representative Office must submit a written request to the People's Committee of the province or city where the Representative Office is located and may only make changes upon written approval from the People's Committee of the province or city.

In the case of changing the Head of the Representative Office, the Representative Office must report in writing to the State Bank of Vietnam (along with the curriculum vitae of the new Head of the Representative Office) within ten days from the date of receipt of the written approval from the People's Committee of the province or city.

7.5. Regarding relocation of the Representative Office:

When there is a need to relocate the Representative Office within the same province or city, the Representative Office must submit a written application to the People's Committee of the province or city where the Representative Office is located and may only relocate after obtaining written approval from the People's Committee of the province or city.

Within ten days from the date of receipt of the written approval from the People's Committee of the province or city, the Representative Office must notify the State Bank of Vietnam in writing about the relocation mentioned above.

7.6. Regarding termination of operations of the Representative Office: The Representative Office may terminate operations in the following cases:

1. Expiration of the term specified in the License;

2. At the request of the Foreign Commercial Bank;

3. When a branch of the Foreign Commercial Bank commences operations in the same province or city;

4. When the Foreign Commercial Bank is declared bankrupt;

5. When the Representative Office has its License revoked.

In the case of termination of operations of the Representative Office as provided for in points 1, 3, 4, and 5 above, the State Bank of Vietnam will issue a notification to the Foreign Commercial Bank and the People's Committee of the province or city where the Representative Office is located.

In the case where the Representative Office ceases operations according to Point 2 mentioned above, the Bank must submit a written request to the State Bank sixty days before the date on which the Bank plans to cease operations in Vietnam and may only cease operations after receiving approval from the State Bank.

7.7. In cases where the Representative Office ceases operations, the People's Committee of the province or city where the Representative Office is located shall be the competent authority responsible for supervising, inspecting, and urging the fulfillment of the Representative Office’s obligations as stipulated in Article 11 of the Regulation.

8. Handling violations:

8.1. The Representative Office shall be subject to a warning in the following cases:

8.1.1. Violating at a level that warrants a warning as provided for in Article 20 of the Regulation;

8.1.2. Failing to commence operations within six months from the date of issuance of the License or the expiration of the extension period permitted by the State Bank;

8.1.3. Failing to pay the license fee within the time limit specified in Point 5.1 of this Circular;

8.1.4. Violating the reporting system as provided for in Point 9.2 of this Circular.

8.2. The Representative Office shall be subject to a fine as prescribed in Articles 19 and 20 of the Regulation.

8.3. The Representative Office shall not be considered for an extension of the License in the following cases:

- Submitting the application for an extension of the License after the time limit specified in Point 7.3 of this Circular;

- Being warned for violating the same current provisions of Vietnamese law three (three) times or more;

8.4. The Representative Office shall have its License revoked in the following cases:

8.4.1. The total amount of fines imposed under Article 20 of the Regulation reaching 20,000 (twenty thousand) US dollars or more (excluding fines for repeat offenses);

8.4.2. Violating the scope of operations of the Representative Office recorded in the License for the second time.

Responsibilities for management, inspection, handling of violations, and periodic reporting:

9.1. Responsibilities for management, inspection, and handling of violations:

9.1.1. The State Bank shall be responsible for:

Uniformly managing administrative state affairs, conducting regular inspections of all aspects of the Representative Office's activities in Vietnam.

Serving as the coordinating body to work with the People's Committee of the province or city to organize inspections of the Representative Office's activities when deemed necessary or upon request from ministries, sectors, or the People's Committee of the province or city concerned.

Issuing decisions to handle violations at levels of suspension or cessation of operations and fines of ten thousand US dollars or more.

Recommending the People's Committee of the province or city to issue decisions to handle violations below the level of decisions made by the State Bank.

9.1.2. The People's Committee of the province or city where the Representative Office is located shall be responsible for:

Administrative management of Representative Offices within its territorial jurisdiction, including leasing premises, hiring (hiring) labor, registration as required, and all activities of the Representative Office in the locality;

Inspecting and supervising all activities of the Representative Office in the locality;

When deemed necessary, proposing the State Bank to take the lead in coordinating with relevant agencies to organize inspections of the Representative Office's activities in the locality pursuant to a written decision by the Governor of the State Bank;

Issuing decisions to handle violations below the level of decisions made by the State Bank.

9.2. Periodic Reporting:

The Representative Office must submit written reports on its activities for the first six months of the year and for the entire year (according to Form No. 4 of this Circular) to the State Bank (Department of Financial Institutions) and the People's Committee of the province or city where the Representative Office is located. Reports for the first six months must be submitted before July 15, and annual reports must be submitted before January 20 of the following year.

In cases deemed necessary, the State Bank and the People's Committee of the province or city where the office is located may require the Representative Office to submit ad hoc reports outside of the aforementioned periodic reports, provide documentation, or explain issues related to its activities.

10. Provisions on Implementation:

10.1. Representative Offices of Banks that were previously issued Licenses by the Ministry of Trade must submit applications for reissuance of Licenses to the State Bank of Vietnam.

10.2. This Circular takes effect from the date of signature. Decision No. 188/QĐ-NH8 dated October 2, 1993, issued by the Governor of the State Bank of Vietnam regarding Representative Offices of Banks and Foreign Finance Companies in the Socialist Republic of Vietnam, shall cease to be effective.