Circular No. 06/2002/TT-NHNN guiding the implementation of Decree No. 79/2002/NĐ-CP dated October 4, 2002 of the Government on the organization and operation of finance companies

CIRCULAR

Guidelines for Implementing Decree No. 79/2002/NĐ-CP dated October 4, 2002

of the Government on the Organization and Operation of Financial Companies

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On October 4, 2002, the Government issued Decree No. 79/2002/NĐ-CP on the organization and operation of financial companies. The State Bank of Vietnam guides the implementation of certain provisions of the Decree within the scope of its authority as follows:

 

PART I. GENERAL PROVISIONS

2. Applicability:

1.1. These Circulars provide detailed guidance on certain contents of Decree No. 79/2002/NĐ-CP dated October 4, 2002 of the Government on the organization and operation of financial companies (hereinafter referred to as Decree No. 79/2002/NĐ-CP).

1.2. The State Bank of Vietnam shall issue separate documents to guide the following contents related to the organization and operation of financial companies:

a) Regulations on the Board of Directors, Supervisors, and Managers;

b) Provisions on ethical standards, professional qualifications, and management capabilities of the Board of Directors, Supervisory Board, and Managers;

c) Regulations on shareholders, shares, stocks, and registered capital;

d) Regulations on establishing and terminating branch and representative office operations;

e) Regulations on factoring activities.

2. Types of Financial Companies:

A financial company is a non-bank credit institution, a Vietnamese legal entity, and operates independently. Financial companies established and operating in Vietnam include the following types:

2.1. State-owned financial companies: these are financial companies funded, established, and managed by the state for business operations. State-owned financial companies established and operating in Vietnam are organized in two forms:

a) State-owned financial companies under State-owned Corporations, funded with 100% of their registered capital by State-owned Corporations.

b) Other state-owned financial companies.

The issuance of licenses for the establishment and operation of this type of financial company is carried out according to the specific guidelines of the State Bank of Vietnam.

2.2. Joint-stock financial companies: these are financial companies established through joint contributions by organizations and individuals in accordance with the regulations of the State Bank of Vietnam and other laws, operating in the form of joint-stock companies.

2.3. Financial companies affiliated with credit institutions: these are financial companies established by credit institutions using their own capital, operating independently and having legal person status as prescribed by law.

2.4. Joint venture financial companies: these are financial companies established through joint contributions between domestic parties including one or more credit institutions and enterprises from Vietnam and foreign parties including one or more foreign credit institutions based on a joint venture agreement.

2.5. Wholly foreign-owned financial companies: these are financial companies established by one or more foreign credit institutions in accordance with Vietnamese law.

3. Term of Operation:

The term of operation of financial companies in Vietnam shall not exceed 50 years. In cases where an extension of the term of operation is required, it must be approved by the State Bank of Vietnam. Each extension period shall not exceed 50 years.

For financial companies under State-owned Corporations and financial companies affiliated with credit institutions, the term of operation of the financial company shall not exceed the term of operation of the State-owned Corporation or the credit institution.

4. Registered Capital:

The registered capital of financial companies can be contributed in the following forms:

The charter capital of leasing companies can be contributed in the following forms:

a) For financial companies under State-owned Corporations, financial companies affiliated with credit institutions, and joint-stock financial companies, the registered capital is contributed in Vietnamese Dong.

b) For wholly foreign-owned financial companies, the registered capital is contributed in US Dollars.

c) For joint venture financial companies: foreign parties contribute the registered capital in US Dollars, while domestic parties may contribute the registered capital in US Dollars or Vietnamese Dong. In cases where the contribution is made in Vietnamese Dong, the amount of the registered capital contribution must be converted into US Dollars at the average interbank foreign exchange rate published by the State Bank of Vietnam at the time of contribution.

4.2. By Tangible Assets:

The registered capital contributed by tangible assets must be legal property with proof of ownership and necessary for the direct operation of the financial company. The valuation and transfer of ownership of contributed assets are carried out in accordance with current Vietnamese law.

5. Contribution Ratio of Registered Capital, Transfer of Contributed Capital, and Profit Distribution of Joint Venture Financial Companies and Wholly Foreign-Owned Financial Companies:

5.1. Contribution Ratio of Registered Capital:

a) Contribution ratio: the contribution ratio of the registered capital of foreign and domestic parties in joint venture financial companies is agreed upon by the parties and approved by the State Bank of Vietnam. The portion of the foreign party's contribution to the registered capital of the financial company shall not exceed 49%.

b) The contribution ratio of joint venture financial companies and wholly foreign-owned financial companies must be specifically stipulated in the Articles of Association of the financial company.

5.1. Ratio of Charter Capital Contribution: The ratio of charter capital contribution by foreign and Vietnamese parties in joint venture leasing companies is agreed upon by the parties and approved by the State Bank of Vietnam. The portion of capital contributed by foreign parties must not be less than thirty percent (30%) of the charter capital of the company.

a) Domestic and foreign parties in joint venture financial companies have the right to transfer their contributed capital to other parties in the joint venture, but they must ensure compliance with the contribution ratio of registered capital as stipulated in point 5.1. In cases where the transferred capital exceeds the specified limit, approval from the State Bank of Vietnam is required.

b) Wholly foreign-owned financial companies have the right to transfer their capital but must prioritize Vietnamese organizations.

c) Conditions for transferring capital of joint venture financial companies and wholly foreign-owned financial companies must be specifically stipulated in the Articles of Association of the financial company and must comply with the provisions of the law.

d) All cases of capital transfer of joint venture financial companies and wholly foreign-owned financial companies must report to the State Bank of Vietnam and only become effective after approval by the State Bank of Vietnam.

e) In cases where profit arises from the transfer of capital of financial companies, the transferring party must pay taxes in accordance with Vietnamese law.

5.3. Profit Distribution and Risk Sharing Levels:

The parties participating in a joint venture finance company share profits and bear risks of the joint venture finance company according to the capital contribution ratio of each party, except where the parties have agreed otherwise as stipulated in the joint venture contract.

6. Definitions:

In this Circular, the following terms are understood as follows:

6.1. Foreign credit organization: refers to a foreign bank, financial organization, or international financial organization established under foreign or international laws, which participates in contributing capital to a joint venture finance company or a wholly foreign-owned finance company in Vietnam.

6.2. Statutory capital: is the minimum level of capital required by law to establish a finance company.

6.3. Registered capital: is the amount of capital contributed by organizations and individuals and recorded in the Charter of the finance company.

6.4. Founding member: refers to organizations and individuals participating through the first Charter of the finance company.

6.5. Major shareholder: refers to an individual or organization holding more than 10% of the registered capital or possessing more than 10% of the voting shares at the finance company.

PART II. REGULATIONS ON GRANTING LICENSE FOR ESTABLISHMENT AND OPERATION OF FINANCE COMPANIES

AND ACTIVITIES RELATING TO FINANCIAL COMPANIES

7. Conditions for obtaining a License for establishment and operation of finance companies (hereinafter referred to as the License):

7.1. There is a need to operate in the area applied for.

7.2. Having sufficient statutory capital as prescribed in Decree No. 82/1998/NĐ-CP dated October 3, 1998 of the Government on the list of statutory capital levels for credit organizations, specifically as follows:

a) The statutory capital of state-owned finance companies, joint-stock finance companies, and finance companies directly affiliated with credit organizations is 50 billion VND.

b) The statutory capital of joint venture finance companies and wholly foreign-owned finance companies is 5 million USD.

7.3. Founding members must be reputable organizations and individuals with financial capacity.

7.4. Managers and executives must have full civil capacity and appropriate professional qualifications in accordance with the activities of the finance company and regulations of the State Bank.

7.5. Having a Charter on organization and operation that is consistent with the Law on Credit Organizations, Decree No. 79/2002/NĐ-CP, and other relevant laws.

7.6. Having a feasible business plan.

7.7. In addition to the above conditions, foreign parties in joint venture finance companies and wholly foreign-owned finance companies must also:

a) Be permitted by competent authorities in their home countries to carry out banking activities or finance company operations.

b) Being permitted by the competent authority of the foreign country to operate in Vietnam.

8. Application Documents for Obtaining a License

Application documents for obtaining a License for finance companies include:

8.1. Application for License:

a) For state-owned enterprise finance companies and finance companies directly affiliated with credit organizations: signed by the Chairman of the Board of Directors of the state-owned enterprise or the credit organization, or by a person authorized by the Chairman of the Board of Directors of the state-owned enterprise or the credit organization (Annex 1a and Annex 1b).

b) For joint-stock finance companies: signed by founding members or their authorized representatives (Annex 1c).

c) For joint venture finance companies and wholly foreign-owned finance companies: signed by the legal representative or a duly authorized representative of the contributing parties (Annex 1d).

8.2. Draft Charter: The Charter of the finance company must contain the following main contents:

a) Name and location of the headquarters of the finance company;

b) Term of operation;

c) Content and scope of operations;

d) Registered capital and method of capital contribution;

e) Procedures for electing, appointing, and dismissing members of the Board of Directors, General Director (Director), and Supervisory Board;

g) Duties and powers of the Board of Directors, Supervisory Board, and General Director (Director);

h) Legal representative of the finance company;

i) Rights and obligations of shareholders;

k) Financial, accounting, auditing, and internal audit principles;

l) Cases of dissolution and dissolution procedures;

m) Procedures for amending the Charter.

8.3. Business Plan: clearly stating the content, method, and geographical area of operations, benefits to the economy; including a specific three-year operational plan.

8.4. List of founding members, resumes (Annex 2), and professional certificates of founding members, Board of Directors members, Supervisory Board members, and General Director (Director) of the finance company;

8.5. Capital contribution plan, list, and commitment regarding the level of registered capital contributions from contributing parties;

8.6. Financial situation and related information about major shareholders. For major shareholders that are enterprises, the documents to be submitted include:

a) Decision on establishment;

b) Current charter;

c) Certificate from the competent authority regarding the current registered capital and actual paid-in capital;

d) Document appointing the legal representative of the enterprise;

e) Balance sheet, profit and loss statement audited, and report on operating status over the last three years.

8.7. Approval document from the People's Committee of the province or centrally governed city regarding the location of the finance company's headquarters.

9. Application Documents for Obtaining a License for Finance Companies Belonging to State-Owned Enterprises:

In addition to the documents prescribed in Article 8 of Part II of this Circular, application documents for obtaining a License for finance companies belonging to state-owned enterprises also include the following documents:

9.1. Document of the Prime Minister approving the principle of allowing the establishment of finance companies belonging to state-owned enterprises.

9.2. Document approving the establishment of finance companies belonging to state-owned enterprises signed by the Minister in charge of the economic and technical sector.

9.3. Document of the state-owned enterprise approving the source and level of registered capital granted to finance companies belonging to state-owned enterprises.

10. Application Documents for Obtaining a License for Finance Companies Directly Affiliated with Credit Organizations:

In addition to the documents prescribed in Article 8 of Part II of this Circular, application documents for obtaining a License for finance companies directly affiliated with credit organizations also include the following documents:

10.1. Document of the Chairman of the Board of Directors of the credit organization or a person authorized by the Chairman of the Board of Directors regarding the source and level of registered capital granted to the finance company.

10.2. Documents related to the credit organization as the owner, including:

a) Decision on establishment or License for establishment and operation, business registration certificate;

b) Current charter;

c) Decision confirming the registered capital by the State Bank;

d) Balance sheet, profit and loss statement audited, and report on operating status over the last three years.

11. Application documents for a License for Joint Venture Financial Companies and 100% Foreign Capital Financial Companies:

In addition to the documents stipulated in Point 8, Section II of this Circular, the application documents for a License for Joint Venture Financial Companies and 100% Foreign Capital Financial Companies shall also include the following documents:

11.1. The Articles of Association of the capital contributors;

11.2. Licenses of the capital contributors;

11.3. Documents issued by foreign authorities with jurisdiction granting permission to the foreign party to operate in Vietnam under the form of a Joint Venture Financial Company or a 100% Foreign Capital Financial Company. If the laws of the home country do not require such a document, there must be evidence confirmed by the competent authority;

11.4. Balance sheets, profit and loss statements audited and reports on operational status over the last three years of the capital contributors;

11.5. The Joint Venture Agreement for Joint Venture Financial Companies shall include the following main contents:

a) Name and address of the Joint Venture Financial Company;

b) Name and address of representatives of the parties participating in the joint venture;

c) Duration of operation of the joint venture;

d) Registered capital: contribution ratio, amount of each party's contribution, contribution plan, specifying clearly the amount in foreign currency, Vietnamese dong, and in-kind (if any);

e) Rights and obligations of the parties;

g) Number and ratio of members of the Board of Directors, Supervisory Board, and Management Board of the parties within the joint venture;

h) Projected number of departments and quantity of staff at the initial stage from each side (number of Vietnamese citizens, number of foreign nationals);

i) Principles of accounting, reporting, establishment and use of funds; distribution of profits and losses among the joint venture participants;

k) Procedures for resolving disputes between the parties arising from the implementation of the joint venture agreement, procedures for liquidation, dissolution, merger, and consolidation of the Joint Venture Financial Company;

l) Conditions for amending and supplementing the joint venture agreement.

12. Submission of Application Documents for a License:

12.1. Application documents for a License for State-Owned Enterprise Financial Companies, Joint Stock Financial Companies, and Financial Companies directly affiliated with credit organizations:

The documents shall be prepared in two sets in Vietnamese. All documents in the set must be originals; in cases where they are copies, they must be certified by the issuing authority or notarized by a Notary Public;

12.2. Application documents for a License for Joint Venture Financial Companies and 100% Foreign Capital Financial Companies:

a) The documents shall be prepared in two sets, one in Vietnamese and one in English. Documents prepared abroad must be originals or certified copies by the competent authority;

b) Documents requiring consular legalization include: licenses from foreign authorities permitting foreign credit institutions to conduct banking activities or financial company operations, and documents from foreign authorities permitting the foreign party to operate in Vietnam under the form of a Joint Venture Financial Company or a 100% Foreign Capital Financial Company;

c) Vietnamese copies and translations from foreign languages into Vietnamese must be certified by a Vietnamese Notary Public or diplomatic missions, consular offices of Vietnam abroad;

12.3. Organizations and individuals applying for a License must submit two sets of documents to the State Bank of Vietnam according to Points 12.1 and 12.2. For applications to establish a Joint Stock Financial Company, the application documents must be submitted to the Branch of the State Bank of Vietnam in the province or city where the company plans to locate its headquarters for review.

13. Confirmation of Application Documents and Time Limit for Issuing a License:

13.1. After receiving all application documents, the State Bank will confirm in writing the completeness of the application set to the representative of the capital contributors;

13.2. Time limit for reviewing and issuing a License: Within ninety days from the date of receipt of complete application documents, the State Bank will issue or refuse to issue a License. In case of refusal, the State Bank will provide a written explanation of the reasons.

14. Establishment and Operation License:

The License shall be issued by the State Bank according to the prescribed model, including:

14.1. License for State-Owned Enterprise Financial Companies, Financial Companies directly affiliated with credit organizations, and Joint Stock Financial Companies (Annex 3a);

14.2. License for Joint Venture Financial Companies and 100% Foreign Capital Financial Companies (Annex 3b).

15. Fees for Issuing a License:

15.1. The fee for each issuance of a License (or extension of a License) for Financial Companies shall be implemented according to the regulations of the Ministry of Finance regarding the collection, payment, management, and use of fees and charges in the banking sector;

15.2. Within fifteen days from the date of issuance of the License (or extension of the License), the Financial Company receiving the License (or extension of the License) must pay the fee into the account at the State Bank's Trading Department or Branch in the province or city where the company locates its headquarters. Payment receipts must be sent to the State Bank (Department of Banks) for record keeping;

15.3. The fee specified in Point 15.1 above shall not be deducted from the registered capital and shall not be refunded under any circumstances.

16. Transfer of Registered Capital of Financial Companies into Blocked Accounts:

16.1. At least thirty days before commencing operations, the Financial Company must:

a) Transfer the entire portion of the registered capital contributed in cash into a blocked account without interest at the State Bank's Trading Department or Branch in the province or city where the company locates its headquarters, and obtain a written confirmation from the account holder. The written confirmation of the amount deposited into the blocked account must be sent to the State Bank (Department of Banks);

b) For the portion of the registered capital contributed in kind, there must be a document transferring ownership rights of the contributed assets to the Financial Company in accordance with Vietnamese law.

16.2. After the date of commencing operations, the Financial Company shall be released from the frozen account to transfer funds into its operational accounts opened at the State Bank, commercial banks, branches of foreign banks, or joint venture banks operating in Vietnam.

17. Business Registration:

17.1. Upon receiving the License, the Financial Company must register its business in accordance with the current laws on business registration.

17.2. The Financial Company must submit to the State Bank the original or certified copy of the Certificate of Business Registration.

18. Commencement of Operations:

18.1. Within 12 (twelve) months from the date of issuance of the License, the Financial Company must complete the following necessary conditions to commence operations:

a) Have Articles of Organization approved by the State Bank;

b) Possess a Certificate of Business Registration;

c) Possess a confirmation letter from the State Bank regarding the full payment of the registered capital;

d) Have legal documentation regarding ownership or permission to use the main office of the Financial Company in Vietnam;

e) At least 30 (thirty) days before commencing operations, publish notices in five consecutive daily newspapers in Vietnamese (at least one central newspaper and one local newspaper where the main office is located), containing the following main contents:

- Full name and abbreviation of the Financial Company;

- Main office address; Telephone number, Fax...

- Registered capital;

- Content, scope, area, and duration of operation;

- Number and date of the License issued by the State Bank; Number and date of the Certificate of Business Registration, issuing authority;

- Names, nationalities of the Chairman and members of the Board of Directors, Supervisory Board, and General Manager (Director) in charge;

- Other contents deemed necessary;

- Date of planned commencement of operations.

18.2. Not later than 15 (fifteen) days before the date of commencement of operations, the Financial Company must notify the State Bank, Business Registration Authority, People's Committee of the province or city where the Financial Company's main office is located, in writing, of the date of commencement of operations.

18.3. In special cases where the Financial Company does not commence operations according to the provisions of point 18.1, at least 30 (thirty) days before the expiration of the commencement period, the Chairman of the Board of Directors or the authorized representative of the Financial Company must send a written request to the State Bank for an extension of the commencement date. The maximum extension period for the commencement of operations of the Financial Company shall not exceed 6 (six) months.

18.4. Upon expiration of the prescribed period or the extended period, if the Financial Company has not commenced operations, the State Bank will proceed to revoke the issued License and process the refund of funds in the frozen account (if any) after deducting the prescribed fees.

19. Revocation of the License:

19.1. A Financial Company that has been granted a License may have its License revoked in accordance with Clause 1, Article 29 of the Law on Credit Institutions.

19.2. The procedures and documents for revoking the License of the Financial Company shall be carried out in accordance with the current laws and guidelines of the State Bank.

19.3. After the revocation of the License, the Financial Company must immediately cease all activities listed in the License.

19.4. The decision to revoke the License shall be announced by the State Bank in the local newspaper where the main office is located and in three consecutive daily central newspapers in Vietnamese.

20. Changes to the Financial Company must be approved by the State Bank:

20.1. The Financial Company must obtain written approval from the State Bank before making changes to any of the following points:

a) Name, content, scope, duration of operation, and Articles of the Financial Company:

The application documents for the State Bank's approval for the Financial Company to change its name, content, scope, duration of operation, and Articles include:

- A report requesting changes to the name, content, scope, duration of operation, and Articles of the Financial Company, clearly stating the reasons and necessity for the change;

- The resolution of the Board of Directors of the Financial Company regarding the change of name, content, scope, duration of operation, and Articles of the Financial Company;

In addition to the above documents, joint-stock Financial Companies must submit to the State Bank the minutes of the Shareholders' Meeting regarding the change of name, content, scope, duration of operation, and Articles of the Financial Company.

b) Registered Capital:

The application documents for the State Bank's approval for the Financial Company to change its registered capital include:

- A report requesting changes to the registered capital of the Financial Company;

- The resolution of the Board of Directors regarding the change of registered capital of the Financial Company.

- Confirmation from the Stock Exchange Department of the State Bank or the branch of the State Bank in the province or city where the Financial Company's main office is located regarding the additional registered capital deposited into the frozen account.

- In addition to the above documents, joint-stock Financial Companies must submit to the State Bank the following additional documents:

+ Minutes of the Shareholders' Meeting regarding the change of registered capital;

+ Plan for changing the registered capital approved by the Shareholders' Meeting;

+ List and proportion of shares held by major shareholders before and after the Financial Company changes its registered capital;

+ Application forms for purchasing shares from major shareholders;

+ Other related documents.

c) Location of the main office, branch, representative office;

The application documents for the State Bank's approval for the Financial Company to change the location of its main office, branch, or representative office include:

- A document from the Chairman of the Board of Directors or the authorized representative requesting the State Bank's approval for the Financial Company to change the location of its main office, branch, or representative office (clearly stating the necessity to move to a new location);

- Approval document from the People's Committee of the province or city where the Financial Company requests to change the location of its main office, branch, or representative office;

- Legal documentation regarding ownership or permission to use the main office, branch, or representative office of the Financial Company in Vietnam;

- Approval document from the Director of the branch of the State Bank in the province or city where the Financial Company plans to locate its main office, branch, or representative office.

- In addition to the above documents, joint-stock Financial Companies must submit to the State Bank the minutes of the Shareholders' Meeting regarding the change of location of the main office, branch, or representative office of the Financial Company.

d) Transferring registered shares exceeding the ratio prescribed by the State Bank;

e) The shareholding percentage of major shareholders;

g) Members of the Board of Directors, General Director (Director) and members of the Supervisory Board.

20.2. Procedures and formalities for requesting approval of changes as stipulated in point 20.1:

a) For joint-stock finance companies: The dossier shall be prepared in two copies and submitted to the State Bank branch in the province or city where the finance company's headquarters is located. Within a maximum period of 15 (fifteen) working days from the date of receipt of all documents, the State Bank branch in the province or city must issue a written opinion on the requests for change made under point 20.1 by the finance company and send it to the State Bank (Department of Banks) along with one copy of the finance company's dossier.

b) For other finance companies: The dossier shall be prepared in one copy and submitted to the State Bank (Department of Banks).

20.3. Procedures and dossiers for requesting approval of changes as stipulated in points 20.1.d, 20.1.e, and 20.1.g shall be carried out in accordance with the guidelines issued by the State Bank.

20.4. After receiving approval from the State Bank, the finance company must register the changes specified in point 20.1 with the competent state authorities and publish them in central and local newspapers in accordance with the provisions of the law.

21. Changes related to capital contributors of the finance company must be reported to the State Bank:

Within thirty (30) days from the date of the following changes, joint-stock finance companies, joint venture finance companies, and wholly foreign-owned finance companies must submit a written report to the State Bank:

21.1. Changes in the Chairman of the Board of Directors and General Manager (Managing Director) of the capital contributors.

21.2. Changes in the name and address of the capital contributors.

21.3. Capital contributors splitting up, merging, consolidating, dissolving, or going bankrupt.

PART III. MANAGEMENT, OPERATIONS, SUPERVISION AND ORGANIZATIONAL STRUCTURE

22. Management, operations, and supervision:

22.1. Finance companies licensed by the State Bank must have a Board of Directors, a Supervisory Board, and a General Manager (Managing Director). In finance companies, the Board of Directors has the function of managing the company in accordance with the Law on Credit Institutions and other relevant laws; the Supervisory Board is responsible for auditing the financial activities of the company, monitoring compliance with accounting systems, and overseeing the internal audit system of the company; the General Manager (Managing Director) is responsible before the Board of Directors for daily operations in accordance with tasks and powers as stipulated by the Law on Credit Institutions and other relevant laws.

For finance companies affiliated with credit institutions, management and supervision of the company are decided by the Board of Directors and the Supervisory Board of the credit institution.

22.2. The election or dismissal, appointment or removal of the Chairman and other members of the Board of Directors, the Head and other members of the Supervisory Board, and the General Manager (Managing Director) of the finance company shall be carried out in accordance with the law and the guidelines of the State Bank.

22.3. The Chairman and other members of the Board of Directors, the Head and other members of the Supervisory Board, and the General Manager (Managing Director) of the finance company must be approved by the Governor of the State Bank.

During the time that the General Manager (Managing Director) has not been approved by the Governor of the State Bank, the Chairman of the Board of Directors, the Board of Directors members, the Head of the Supervisory Board, and the members of the Supervisory Board shall bear full responsibility under the law (before shareholders for joint-stock finance companies) for all activities of the finance company.

22.4. Specific duties and powers of members of the Board of Directors, the Supervisory Board, and the General Manager (Managing Director) of the finance company shall be defined by the State Bank.

23. Board of Directors:

23.1. The Board of Directors shall have a minimum of three members and a maximum of eleven members. The number of Board of Directors members is determined by the capital contributors or the Shareholders' Meeting and is stipulated in the Articles of Association.

For the Board of Directors of state-owned enterprise finance companies and finance companies affiliated with credit institutions (if any), the number of Board of Directors members ranges from three to five people depending on the scale of development of the finance company.

23.2. Members of the Board of Directors must be individuals with good reputation, professional ethics, and knowledge of banking and financial activities, who do not belong to the categories specified in Article 40 of the Law on Credit Institutions and must comply with the regulations of the State Bank.

23.3. The Chairman and other members of the Board of Directors may not delegate their duties and powers to non-members of the Board of Directors. The Chairman of the Board of Directors may not participate in the Board of Directors or manage another credit institution, except in cases where the organization is a subsidiary of the finance company.

23.4. The Chairman of the Board of Directors may not concurrently hold the position of General Manager (Managing Director) or Deputy General Manager (Deputy Managing Director) of the finance company.

23.5. The term of office of Board of Directors members is from two to five years. The Chairman of the Board of Directors and other Board of Directors members may be re-elected.

24. Supervisory Board:

24.1. The Supervisory Board shall have a minimum of three members, including one Head and at least one member who is a full-time specialist or does not concurrently hold managerial positions within the finance company. The number of Supervisory Board members is stipulated in the Articles of Association of the finance company.

24.2. Members of the Supervisory Board must be individuals with a bachelor's degree or higher in finance and banking, with professional ethics, who do not belong to the categories specified in Article 40 of the Law on Credit Institutions and must comply with the regulations of the State Bank.

25. General Manager (Managing Director):

The General Manager (Managing Director) and Deputy General Manager (Deputy Managing Director) must not belong to the categories specified in Article 40 of the Law on Credit Institutions, must have a bachelor's degree or higher in economics, finance and banking, have at least five years of experience working in the banking and finance sector, possess the ability to manage a finance company according to the regulations of the State Bank, and must reside in Vietnam during their tenure.

26. Organizational structure of the finance company:

26.1. The establishment, termination of operations of branches, representative offices, and the formation of subsidiaries of financial companies shall be carried out in accordance with Article 14 and 15 of Decree No. 79/2002/ND-CP and guiding documents of the State Bank of Vietnam.

26.2. The administrative apparatus at the headquarters and branches of financial companies includes: office, specialized and operational departments, and transaction rooms.

27. Splitting, dividing, merging, consolidating, acquisition, and dissolution:

The splitting, dividing, merging, consolidating, acquisition, and dissolution of financial companies must be approved in writing by the State Bank of Vietnam.

SECTION IV. OPERATIONS OF FINANCIAL COMPANIES

General provisions on the operations of financial companies:

The content and scope of operations of financial companies in Vietnam are stipulated in Chapter III of Decree No. 79/2002/ND-CP and guiding documents of the State Bank of Vietnam.

29. Capital raising:

Financial companies are permitted to raise capital in accordance with Article 17 of Decree No. 79/2002/ND-CP and guiding documents of the State Bank of Vietnam.

30. Credit activities:

Financial companies are allowed to provide credit in accordance with Articles 18, 19, 20, and 21 of Decree No. 79/2002/ND-CP and guiding documents of the State Bank of Vietnam.

31. Opening accounts and treasury services:

Financial companies are allowed to open deposit accounts at the State Bank of Vietnam and provide treasury services in accordance with Articles 22 and 23 of Decree No. 79/2002/ND-CP and guiding documents of the State Bank of Vietnam.

32. Other business activities:

Financial companies are permitted to carry out other business activities as prescribed in Article 24 of Decree No. 79/2002/ND-CP and current laws and regulations.

33. Business activities requiring approval from competent state authorities:

Financial companies are permitted to carry out business activities as prescribed in Article 25 of Decree No. 79/2002/ND-CP after obtaining permission from the State Bank of Vietnam or relevant state management agencies.

34. Safeguarding restrictions:

Financial companies must comply with regulations on restrictions to ensure safety in operations as prescribed in Articles 26, 27, 28, 29, and 30 of Decree No. 79/2002/ND-CP and guiding documents of the State Bank of Vietnam.

SECTION V. FINANCE, ACCOUNTING, AND REPORTING REGIMES

35. Finance:

The fiscal year, income, and expenditure of financial companies shall be conducted in accordance with Article 31 of Decree No. 79/2002/ND-CP and regulations of the Ministry of Finance.

36. Accounting:

The accounting of financial companies must be carried out in accordance with the provisions of Article 32 of Decree No. 79/2002/ND-CP.

37. Establishment and utilization of funds:

The establishment, maintenance, and utilization of funds by financial companies shall be carried out in accordance with the provisions of Article 33 of Decree No. 79/2002/ND-CP.

38. Repatriation of profits by foreign investors:

Foreign parties in financial companies may repatriate profits distributed and assets after liquidation or cessation of operations in accordance with Article 34 of Decree No. 79/2002/ND-CP.

39. Financial reporting and auditing systems:

Financial companies must implement financial reporting and auditing systems in accordance with Article 35 of Decree No. 79/2002/ND-CP and guidelines of the State Bank of Vietnam.

PART VI. INSPECTION, SPECIAL SUPERVISION, BANKRUPTCY LIQUIDATION AND DISSOLUTION

40. Inspection:

The inspection of the State Bank of Vietnam on the activities of finance companies in Vietnam shall be carried out in accordance with the provisions of Article 36 of Decree No. 79/2002/NĐ-CP and the inspection regulations of the State Bank of Vietnam.

41. Special supervision, bankruptcy, dissolution and liquidation:

Special supervision, bankruptcy, dissolution, and liquidation for finance companies shall be implemented in accordance with the provisions of Article 37 of Decree No. 79/2002/NĐ-CP and other current laws.

42. Rewards and penalties for violations:

Rewards and penalties for violations in the activities of finance companies shall be implemented in accordance with the provisions of Article 38 of Decree No. 79/2002/NĐ-CP and other current laws.

PART VII. IMPLEMENTATION PROVISIONS

43. Adjustment for finance companies that have been granted Licenses:

43.1. Within twelve months from the date this Decree No. 79/2002/NĐ-CP takes effect, finance companies established and operating under the business licenses issued by the State Bank of Vietnam before the effective date of this Decree must adjust their Articles of Association to comply with the provisions of Decree No. 79/2002/NĐ-CP and related guiding documents.

43.2. The duration of operation of finance companies shall be applied as stipulated in the already issued business licenses.

43.3. Finance companies are not required to reapply for establishment and business licenses.

The content and scope of operations of finance companies as stated in the already issued business licenses will be supplemented and adjusted according to the provisions of Decree No. 79/2002/NĐ-CP and other guiding documents of the State Bank of Vietnam.

44. Effective date:

This Circular shall take effect fifteen days from the date of signature.

45. Implementation organization:

The Director of the Office, Heads of Departments of Banks and Non-Bank Credit Institutions, Heads of units under the State Bank of Vietnam, Governors of Provincial and Central City Branches of the State Bank of Vietnam, Chairmen of the Board of Directors, General Managers (Directors) of finance companies within their respective authority and responsibilities shall be responsible for implementing this Circular./.