Circular No. 08/2001/TT-NHNN guiding the implementation of Decree No. 16/2001/NĐ-CP dated May 2, 2001 of the Government on the organization and operation of financial leasing companies.

CIRCULAR

Guidelines for Implementing Decree No. 16/2001/NĐ-CP dated May 2, 2001

of the Government on the organization and operation of financial leasing companies

_________________________

 

Pursuant to Article 42 of Decree No. 16/2001/NĐ-CP dated May 2, 2001 of the Government on "the organization and operation of financial leasing companies," the State Bank of Vietnam guides the implementation of certain provisions of the Decree within the scope of its authority as follows:

Section I

GENERAL PROVISIONS

1. Explanation of terms:

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

1.1. Lessee: refers to organizations and individuals operating in Vietnam who directly use leased assets for their own production and business purposes, including:

a) Individuals with business registration;

b) Households;

c) Enterprises;

d) Other organizations eligible to borrow from credit institutions.

1.2. Foreign Credit Institution: refers to foreign banks, financial companies, financial leasing companies, or international financial organizations established under foreign or international laws, participating in capital contributions to joint venture financial leasing companies or wholly foreign-owned financial leasing companies.

1.3. Minimum Capital Requirement: refers to the minimum charter capital required by law to establish a financial leasing company.

1.4. Charter Capital: refers to the amount of capital contributed by organizations and individuals and recorded in the charter capital of the financial leasing company.

1.5. Founding Member: refers to organizations and individuals who approve the first articles of incorporation of the financial leasing company.

2. Types of Financial Leasing Companies:

A financial leasing company is a non-bank credit institution, a Vietnamese legal entity, primarily engaged in financial leasing activities. Financial leasing companies established and operating in Vietnam take the following forms:

2.1. State-Owned Financial Leasing Company: refers to a financial leasing company funded, established, and managed by the state for business operations. The issuance of licenses for the establishment and operation of state-owned financial leasing companies shall be guided separately by the State Bank of Vietnam.

2.2. Joint Stock Financial Leasing Company: refers to a financial leasing company established in the form of a joint stock company, where organizations and individuals contribute capital according to the guidelines of the State Bank of Vietnam and other relevant laws.

2.3. Independent Financial Leasing Company Affiliated with Credit Institutions: refers to an independent financial leasing company with legal personality established by a credit institution using its own capital as the sole owner, in accordance with the guidelines of the State Bank of Vietnam and other relevant laws.

2.4. Joint Venture Financial Leasing Company: refers to a financial leasing company established through capital contributions between the Vietnamese side, comprising one or more credit institutions or enterprises, and the foreign side, comprising one or more foreign credit institutions, based on a joint venture agreement.

2.5. Wholly Foreign-Owned Financial Leasing Company: refers to a financial leasing company established with capital from one or more foreign credit institutions, in accordance with Vietnamese law.

3. The term of operation of financial leasing companies shall be implemented in accordance with Article 5 of Decree No. 16/2001/NĐ-CP dated May 2, 2001 of the Government.

4. Registered Capital:

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

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

a) Vietnamese Dong (VND): For state-owned financial leasing companies, affiliated financial leasing companies of credit institutions, and joint stock financial leasing companies, the charter capital is contributed in Vietnamese Dong.

b) US Dollar (USD): For joint venture financial leasing companies and wholly foreign-owned financial leasing companies, the charter capital is contributed in US Dollars.

c) The Vietnamese party participating in a joint venture financial leasing company may contribute charter capital in US Dollars or Vietnamese Dong. In the case of contribution in Vietnamese Dong, the amount of capital must be converted into US Dollars at the average interbank exchange rate published by the State Bank of Vietnam at the time of contribution.

4.2. By Tangible Assets: Must be assets with legal documentation proving ownership and necessary for the direct operation of the financial leasing company (excluding assets intended for leasing). The valuation and transfer of ownership of contributed assets shall be carried out in accordance with current Vietnamese law.

5. Proportions of Charter Capital Contribution, Transfer of Contributed Capital, and Profit Distribution in Joint Venture Financial Leasing Companies and Wholly Foreign-Owned Financial Leasing Companies:

5.1. Proportion of Charter Capital Contribution: The proportion of charter capital contribution by the foreign and Vietnamese parties in a joint venture financial leasing company is agreed upon by the parties and approved by the State Bank of Vietnam. The foreign party's contribution must not be less than 30% of the charter capital of the financial leasing 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) The Vietnamese and foreign parties in a joint venture financial leasing company have the right to transfer their contributed capital to other parties in the joint venture, but they must ensure compliance with the capital contribution ratio stipulated in point 5.1.

b) A wholly foreign-owned financial leasing company has the right to transfer its capital but must prioritize Vietnamese organizations.

c) The ratio and conditions for transferring capital in a joint venture financial leasing company must be specifically stipulated in the company's articles of incorporation and comply with the law. If the transferred capital exceeds the prescribed limit, the transfer will only be effective after approval by the State Bank of Vietnam.

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

5.3. Profit Distribution and Risk Sharing: The parties participating in a joint venture financial leasing company share profits and bear risks of the joint venture financial leasing company according to their respective capital contribution ratios, except where otherwise agreed in the joint venture agreement.

PART II

REGULATIONS ON THE ISSUE OF LICENSE FOR ESTABLISHMENT AND OPERATION

FOR FINANCIAL LEASING COMPANIES

6. Conditions for Obtaining a License for Establishment and Operation of a Financial Leasing Company (hereinafter referred to as the license):

6.1. There is a need to operate financial leasing activities in the area where the company wishes to operate;

6.2. Having sufficient statutory capital as prescribed in Decree No. 82/1998/NĐ-CP dated October 3, 1998 of the Government, specifically as follows:

a) The statutory capital of joint-stock leasing companies and leasing companies affiliated with credit institutions is VND 50 billion.

b) The statutory capital of joint venture leasing companies and wholly foreign-owned leasing companies is US$ 5 million.

6.3. Founding members must be organizations and individuals with good reputation and financial capacity;

6.4. Managers and executives must have full civil capacity and appropriate professional qualifications for the activities of leasing companies as stipulated by the State Bank of Vietnam;

6.5. Having a draft charter on organization and operation consistent with the Law on Credit Institutions, Decree No. 16/2001/NĐ-CP dated May 2, 2001 of the Government on the organization and operation of leasing companies, and other relevant laws;

6.6. Having a feasible business plan;

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

a) Be permitted by competent authorities of their home countries to engage in banking activities or leasing activities;

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

7. Documents for applying for a license include:

7.1. Application for License:

a) For leasing companies affiliated with credit institutions: signed by the Chairman of the Board of Directors or a person authorized by the Chairman of the Board of Directors (Annex 1a);

b) For joint-stock leasing companies: signed by founding members or representatives authorized by the group of founding members (Annex 1b);

c) For joint venture leasing companies and wholly foreign-owned leasing companies: signed by the legal representative or a person legally authorized by the contributing parties (Annex 1c).

7.2. Draft Charter: The charter of leasing companies must contain the following main contents:

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

b) Term of operation;

c) Content and scope of operations;

d) Registered capital and method of capital contribution;

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

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

g) Legal representative of the leasing company;

h) Rights and obligations of shareholders;

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

k) Circumstances and procedures for dissolution;

l) Procedures for amending the charter.

7.3. Business Plan: Clearly state the content, methods, scope of operations, benefits to the economy; including specific plans for the first three years of operation.

7.4. List of founding members, board members, supervisory board members, and general director (director) of the leasing company, along with their resumes (Annex 2) and documents proving their qualifications and professional expertise;

7.5. Capital contribution plan, list, and commitment to the level of registered capital contribution of contributing parties;

7.6. Financial situation and related information about major shareholders.

7.7. Approval from the People's Committee of the province or centrally administered city regarding the location of the leasing company's headquarters.

8. In addition to the documents specified in point 7 of Section II of this Circular, the application dossier for a license for leasing companies affiliated with credit institutions shall also include the following documents:

8.1. A document signed by the Chairman of the Board of Directors of the credit institution or a person authorized by the Chairman of the Board of Directors regarding the source and level of registered capital provided to the leasing company.

8.2. Documents related to the credit institution as the owner, including:

a) Decision on establishment or business license, 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.

9. In addition to the documents specified in point 7 of Section II of this Circular, the application dossier for a license for joint venture leasing companies and wholly foreign-owned leasing companies shall also include the following documents:

9.1. Articles of the capital contributors;

9.2. Licenses of contributing parties;

9.3. Documents from foreign authorities with jurisdiction approving foreign parties to operate in Vietnam under the form of joint venture leasing companies or wholly foreign-owned leasing companies. If the laws of the home country do not require such documents, proof of confirmation from the competent authority is required;

9.4. Balance sheets, profit and loss statements audited, and reports on operational status over the last three years of contributing parties;

9.5. Joint venture agreement for joint venture leasing companies. The joint venture agreement includes the following main contents:

a) Name and address of the joint venture leasing company;

b) Address and representatives of the parties involved 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, fund establishment and utilization; distribution of profits and losses among joint venture parties;

k) Procedures for resolving disputes between parties arising from the implementation of the joint venture agreement, procedures for liquidation and dissolution, and merger of joint venture leasing companies;

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

10. Provisions on submission of application dossiers for licenses:

10.1. Application dossiers for licenses for joint-stock leasing companies and leasing companies affiliated with credit institutions shall be prepared in two copies in Vietnamese. All documents in the dossier must be originals, and in cases where they are copies, they must be certified by the issuing authority or notarized by a state notary;

10.2. Application dossiers for licenses for joint venture leasing companies and wholly foreign-owned leasing companies must be prepared in two copies, one in Vietnamese and one in English or French. Documents prepared abroad must be originals or certified copies authenticated by the competent authority.

Documents requiring consular legalization include: licenses from foreign authorities permitting foreign credit institutions to conduct banking activities or leasing activities, and documents from foreign authorities permitting foreign parties to operate in Vietnam under the form of joint venture leasing companies or wholly foreign-owned leasing companies.

Vietnamese copies and translations from foreign languages into Vietnamese must be certified by a Vietnamese notary office or a diplomatic mission, consular office of Vietnam abroad.

10.3. Organizations and individuals applying for a license shall submit two sets of application files to the State Bank of Vietnam in accordance with points 10.1 and 10.2.

11. Confirmation of the application file and the time limit for issuing the license:

11.1. After receiving all application files, the State Bank of Vietnam shall confirm in writing the completeness of the application file for the representative of the capital contributors.

11.2. Time limit for examination and issuance of the license: Within ninety days from the date of receipt of complete application files for the license, the State Bank of Vietnam shall issue or refuse to issue the license. In case of refusal to issue the license, the State Bank of Vietnam must provide a written explanation of the reasons.

11.3. The license issued by the State Bank of Vietnam according to the prescribed form includes:

a) License for financial leasing companies directly under credit organizations and joint-stock financial leasing companies (Annex 3a);

b) License for joint venture financial leasing companies and wholly foreign-owned financial leasing companies (Annex 3b).

12. Licensing fees:

12.1. The amount of licensing fee each time a license is granted (or extended):

a) For financial leasing companies directly under credit organizations and joint-stock financial leasing companies, the licensing fee or extension fee must be paid at 0.1% of the charter capital;

b) For joint venture financial leasing companies and wholly foreign-owned financial leasing companies, the licensing fee or extension fee must be paid at 10,000 USD (ten thousand US dollars).

12.2. Within fifteen days from the date of issuance of the license, the financial leasing company that has been granted the license must pay the licensing fee into its account at the State Bank of Vietnam's branch or provincial city branch where the company's headquarters is located. Payment receipts must be sent to the State Bank of Vietnam (Department of Banks) for record keeping.

12.3. The licensing fee specified in point 12.1 above shall not be deducted from the charter capital and shall not be refunded under any circumstances.

13. Transfer of charter capital of financial leasing companies into blocked accounts:

13.1. At least thirty days before commencing operations, the financial leasing company must:

a) Transfer the entire portion of contributed capital in cash into a blocked account without interest at the State Bank of Vietnam's branch or provincial city branch where the company's headquarters is located 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 of Vietnam (Department of Banks);

b) For contributed capital in the form of assets, there must be a legal document transferring ownership of the contributed assets to the financial leasing company in accordance with Vietnamese law.

13.2. After the commencement of operations, the financial leasing company may release funds from the blocked account into operational accounts opened at the State Bank of Vietnam, commercial banks, branches of foreign banks, or joint venture banks operating in Vietnam.

14. Business registration:

14.1. After being granted the license, the financial leasing company must register its business in accordance with current laws on business registration;

14.2. The financial leasing company must send the original or certified copy of the business registration certificate to the State Bank of Vietnam.

15. Commencement of operations:

15.1. Within twelve months from the date of issuance of the license, the financial leasing company must complete the following necessary conditions to commence operations:

a) Have articles approved by the State Bank of Vietnam;

b) Have a business registration certificate;

c) A confirmation letter from the State Bank of Vietnam regarding the full payment of the charter capital;

d) Legal documentation regarding ownership rights or permission to use the main office of the financial leasing company in Vietnam;

đ) At least 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 leasing company;

Main office address; Telephone number, Fax...

Charter capital;

Content, scope, territory, and duration of operations;

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

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

Other contents if deemed necessary;

Scheduled date of commencement of operations.

15.2. At least fifteen days before the scheduled date of commencement of operations, the financial leasing company must notify the State Bank of Vietnam, the Business Registration Authority, and the People's Committee of the province or city where the financial leasing company's main office is located of the date of commencement of operations.

15.3. In special cases where operations are not commenced as stipulated in point 15.1, at least thirty days before the expiration of the commencement period, the Chairman of the Board of Directors or an authorized person of the financial leasing company must submit a written request to the State Bank of Vietnam for an extension of the commencement date. The maximum extension period for the commencement of operations of the financial leasing company shall not exceed six months.

15.4. Upon expiration of the prescribed period or the extended period, if the financial leasing company does not commence operations, the State Bank of Vietnam will proceed to revoke the issued license and process the refund of funds in the blocked account (if any) after deducting the prescribed procedures fee.

16. Revocation of the license:

16.1. Financial leasing companies granted licenses may have their licenses revoked in accordance with Clause 1, Article 29 of the Law on Credit Institutions.

16.2. Procedures and documents for revoking the license of financial leasing companies shall be carried out in accordance with current laws and guidelines of the State Bank of Vietnam.

16.3. After the license is revoked, the financial leasing company must immediately cease all activities listed in the license.

16.4. The State Bank of Vietnam shall publish the decision to revoke the license on the local newspaper where the main office is located and on the central daily newspaper for three consecutive issues in Vietnamese.

17. Changes to the leasing finance company must be approved:

17.1. The leasing finance company must obtain the written approval of the State Bank of Vietnam before making any changes in the following points:

a) The name of the leasing finance company;

b) Authorized capital amount;

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

d) Content, scope, and duration of operation;

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

e) The shareholding percentage of major shareholders;

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

17.2. Procedures and documents for requesting approval for changes as stipulated in point 17.1 shall be carried out according to the guidelines of the State Bank of Vietnam.

17.3. After obtaining the approval of the State Bank of Vietnam, the leasing finance company must register with the competent state agency regarding the changes specified in point 17.1 and must publish in the central and local newspapers as prescribed by law.

 

Section III

ORGANIZATIONAL STRUCTURE, MANAGEMENT, OPERATIONS, AND SUPERVISION

18. Management, operation, and supervision:

18.1. The leasing finance company granted a license by the State Bank of Vietnam shall have a Board of Directors, Supervisory Board, and General Director (Director). In the leasing finance company, the Board of Directors has the function of managing the company according to the provisions of the Law on Credit Institutions and other laws; the Supervisory Board has the duty to check the financial activities of the company, monitor compliance with accounting systems and the operation of the internal audit system of the company; the General Director (Director) is responsible to the Board of Directors for managing daily operations according to tasks and authorities consistent with the provisions of the Law on Credit Institutions and other laws.

For leasing finance companies under credit institutions, management and supervision of the company are decided by the Board of Directors and Supervisory Board of the Credit Institution.

18.2. The election or removal, appointment or dismissal of the Chairman and other members of the Board of Directors, Head and other members of the Supervisory Board, General Director (Director) of the leasing finance company shall be carried out according to the provisions of the law and the guidelines of the State Bank of Vietnam.

18.3. The Chairman and other members of the Board of Directors, Head and other members of the Supervisory Board, General Director (Director) of the leasing finance company must be endorsed by the Governor of the State Bank of Vietnam or be authorized by the Governor of the State Bank of Vietnam to endorse.

18.4. Specific duties and powers of members of the Board of Directors, Supervisory Board, and General Director (Director) of the leasing finance company shall be prescribed by the State Bank of Vietnam.

19. Board of Directors:

19.1. The Board of Directors shall have a minimum of 3 members and not more than 11 members. The number of Board of Directors members is determined by the capital contributors or by the Shareholders' Meeting and is stipulated in the Articles of Association.

19.2. Members of the Board of Directors are individuals with 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 of Vietnam.

19.3. 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 the case of an organization that is a subsidiary.

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

19.5. The term of office of Board of Directors members is from 2 to 5 years. The Chairman of the Board of Directors and other Board of Directors members may be re-elected.

20. Supervisory Board:

20.1. The Supervisory Board shall have a minimum of 3 members, including 1 Head and at least 1 full-time member or cannot concurrently hold managerial positions in the leasing finance company. The number of Supervisory Board members is stipulated in the Articles of Association.

20.2. Members of the Supervisory Board must be individuals with a university degree in finance and banking or higher, 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 of Vietnam.

21. General Director (Director):

The General Director (Director) and Deputy General Director (Deputy Director) must not belong to the categories specified in Article 40 of the Law on Credit Institutions, have a bachelor's degree or higher in economics, banking and finance, have at least 5 years of experience working in the banking and finance sector, possess the ability to manage a leasing finance company according to the regulations of the State Bank of Vietnam, and must reside in Vietnam during their tenure.

22. Organizational structure of the leasing finance company:

22.1. The leasing finance company may establish, terminate branches and representative offices within and outside the country after obtaining the written approval of the State Bank of Vietnam. Conditions, documents, and procedures for establishing and terminating branches and representative offices of the leasing finance company are applied according to Article 33 of the Law on Credit Institutions and the guidelines of the State Bank of Vietnam.

22.2. The leasing finance company may establish subsidiaries with independent legal status and accounting to operate in certain financial, banking, and insurance fields according to the law and the guidelines of the State Bank of Vietnam.

22.3. The support staff at the headquarters and branches of the leasing finance company include: office, specialized departments, and transaction rooms.

23. The division, separation, merger, acquisition, dissolution of the leasing finance company must be approved in writing by the State Bank of Vietnam.

Chapter IV

ACTIVITIES OF FINANCIAL LEASING COMPANIES

24. Content and scope of operations:

24.1. The content and scope of operations of the leasing finance company in Vietnam are prescribed in the license issued by the State Bank of Vietnam, Decree No. 16/2001/NĐ-CP dated May 2, 2001 of the Government, and the guidelines of the State Bank of Vietnam.

24.2. The leasing finance company is permitted to raise funds from the following sources:

a) Accepting time deposits of one year or longer from organizations and individuals.

b) Short-term, medium-term, and long-term loans from domestic and foreign credit institutions.

c) Issue various securities:

Valuable papers include: bonds, deposit certificates, and other valuable papers with terms exceeding one year.

A leasing company is only permitted to issue valuable papers when approved by the State Bank.

The application for issuing valuable papers submitted to the State Bank for review and resolution includes: the request for issuing valuable papers; the issuance plan and the use of funds obtained through issuance; other related documents as required by the State Bank.

d) Receive other sources of funds as prescribed by the State Bank.

24.3. Leasing companies are allowed to conduct the following business operations:

a) Financial leasing;

b) Purchase and leaseback under the leasing business form (hereinafter referred to as purchase and leaseback): Under this form, the leasing company purchases machinery, equipment, transportation means, and movable assets owned by the lessee and leases them back to the lessee under the leasing business form so that the lessee can continue to use these assets for their activities;

c) Advise customers on issues related to leasing business;

d) Carry out entrusted services, asset management, and guarantees related to leasing activities;

đ) Other activities when approved by the State Bank.

24.4. Foreign exchange activities:

a) Foreign exchange activities of joint venture leasing companies and wholly foreign-owned leasing companies are regulated in the license issued by the State Bank. For joint venture leasing companies and wholly foreign-owned leasing companies licensed to operate before Decree No. 16/2001/NĐ-CP dated May 2, 2001 was issued, the State Bank will supplement the foreign exchange activity contents into their operating licenses.

b) Leasing companies not falling within the scope specified in point b, Clause 24.4, Section of this Article, if they wish to engage in foreign exchange activities must submit an application and relevant documents for obtaining a foreign exchange operation license to the State Bank according to current regulations.

24.5. Currency used in leasing transactions:

a) Leasing companies may carry out leasing activities in Vietnamese Dong.

b) For leasing transactions conducted in foreign currency, leasing companies must comply with current regulations on foreign exchange management as in the case of lending in foreign currency and the guidelines of the State Bank.

24.6. Lease interest rate

a) For lease interest rates in Vietnamese Dong, leasing companies set based on the basic lending interest rate and margin determined by the Governor of the State Bank for each period and other related costs.

b) For lease interest rates in foreign currency, leasing companies set based on international market interest rates and supply and demand for foreign currency credit in the country and other related costs.

25. Safety ratio: leasing companies must maintain the safety ratio as stipulated in Article 81 of the Law on Credit Institutions and guiding documents of the State Bank.

26. Limitation on leasing to a single customer:

26.1. The total outstanding lease balance to a single customer shall not exceed 30% of the leasing company's own capital, except for cases involving leasing from entrusted funds of the Government, organizations, individuals, or where the lessee is a credit institution.

26.2. In cases where the leasing needs of a customer exceed 30% of the leasing company's own capital or the customer has leasing needs from multiple sources, leasing companies may jointly lease according to the regulations of the Governor of the State Bank.

26.3. In special cases, for key national projects where the joint leasing capacity of leasing companies does not meet the leasing finance requirements of a customer, the maximum outstanding lease balance for each specific case shall be decided by the Prime Minister.

27. Situations where leasing companies are not allowed to lease:

27.1. Leasing companies are not allowed to lease to the following entities:

a) Members of the Board of Directors, members of the Supervisory Board, General Director (Director), Deputy General Director (Deputy Director) of the leasing company;

b) Appraisers and reviewers of leasing;

c) Father, mother, wife, husband, child of members of the Board of Directors, members of the Supervisory Board, General Director (Director), Deputy General Director (Deputy Director).

27.2. Leasing companies are not allowed to accept guarantees from the entities specified in point 27.1, Section IV of this Circular as a basis for leasing to customers.

28. Restrictions on leasing:

28.1. Leasing companies are not allowed to lease with preferential conditions to the following entities:

Auditing organizations, auditors auditing at the leasing company; Chief Accountant, Inspector;

Major shareholders of the leasing company;

Enterprises where one of the entities specified in point 27.1, Section IV of this Circular owns more than 10% of the enterprise's charter capital.

28.2. The total outstanding lease balance to the entities specified in point 28.1 of this Section shall not exceed 5% of the leasing company's own capital.

29. Leasing companies are allowed to open accounts at the State Bank and commercial banks permitted to operate in Vietnam. In cases requiring opening foreign currency accounts abroad, approval from the State Bank is required.

30. Leasing contracts:

30.1. Leasing contracts must be documented in writing in accordance with the provisions of the Government Decree on the organization and operation of leasing companies;

30.2. Leasing contracts take effect from the date agreed upon by the parties in the contract.

31. Situations leading to early termination of leasing contracts:

31.1. The lessor has the right to terminate the leasing contract before the end of the lease term in any of the following situations:

a) The lessee fails to pay rent as stipulated in the leasing contract;

b) The lessee breaches the terms of the leasing contract;

c) The lessee goes bankrupt or is dissolved;

d) The guarantor is declared bankrupt or dissolved, and the lessor does not accept the proposal to terminate the guarantee or the proposal to replace the guarantor with another guarantor from the lessee.

31.2. The lessee has the right to terminate the financial lease contract before the end of the lease term if any of the following circumstances occur:

a) The lessor fails to deliver the leased asset on time due to the lessor's fault;

b) The lessor breaches the terms of the financial lease contract.

31.3. The financial lease contract may be terminated before the end of the lease term in the event that the leased asset is lost or damaged beyond repair.

31.4. The financial lease contract may be terminated before the end of the lease term if the lessor agrees to allow the lessee to pay the entire lease payment in advance of the lease term specified in the financial lease contract.

32. Handling of financial lease contracts terminated prematurely due to the lessee's fault:

32.1. In case the lessee violates part a, b point 31.1:

a) When the lessee breaches the financial lease contract, the leasing company has the right to reclaim the leased asset and demand the lessee to immediately pay the full remaining lease payments according to the contract.

b) The leasing company may handle the leased asset by renting it to another party or transferring the asset. The proceeds from renting to another party or transferring the asset will be used to offset the receivables from the previous financial lease contract.

c) The lessee remains obligated to continue paying the outstanding debt under the financial lease contract when the leasing company has not yet transferred or rented the leased asset to another party or is required to repay the remaining debt after deducting the transfer proceeds or rental income from the leased asset.

d) In case the lessee has already paid a portion of the lease payments and the leasing company has transferred or rented the asset to another party, if the amount paid plus the transfer proceeds or rental income exceeds the lease payments stipulated in the contract, the leasing company must refund the excess amount to the lessee.

đ) In case the lessee repays the entire lease payments as stipulated in the contract and the residual value of the asset at the end of the contract as agreed upon in the lease contract, the lessee shall be entitled to transfer ownership of the leased asset as if the lease contract had been completed. The conditions and deadlines for lease payment must be approved by the leasing company.

32.2. The handling of financial lease contracts terminated prematurely due to the lessee's bankruptcy or dissolution shall be carried out in accordance with the provisions of the law on bankruptcy and dissolution.

 

Section V

FINANCE, ACCOUNTING AND REPORTING REGIME

33. Finance:

3.1. The fiscal year of the leasing company begins on January 1 and ends on December 31 of each calendar year. The first fiscal year starts from the date of commencement of operations and ends on December 31 of the calendar year.

33.2. Financial receipts and expenditures of the leasing company must comply with the current legal regulations on the financial regime of credit organizations;

33.3. In the case of a joint venture leasing company or a wholly foreign-owned leasing company, the use of the fiscal year of the home country to prepare financial reports for home country credit organizations must be approved in writing by the State Bank.

34. Accounting:

34.1. The accounting of the leasing company must be conducted in accordance with the Law on Credit Organizations and the accounting chart of accounts issued by the State Bank;

34.2. For new business transactions of the leasing company not covered by the accounting chart, the State Bank is responsible for supplementing new accounts into the accounting chart of credit organizations.

35. Establishment and use of reserves:

35.1. Profit realized in the year is the business result of the leasing company after paying taxes according to current laws;

35.2. The establishment, maintenance, and use of reserves by the leasing company must comply with the current legal regulations on the financial regime of credit organizations;

35.3. The leasing company must establish a risk reserve and record it as operating expenses. The establishment and use of the risk reserve must comply with the regulations of the State Bank;

35.4. The leasing company may not use the reserves specified in point 35.2 of this Section to pay dividends or distribute profits to shareholders in any form, except in the case of dissolution and liquidation of the leasing company, but must prioritize repayment to creditors before returning to shareholders;

35.5. The transfer of profits and assets after liquidation or cessation of operations abroad by foreign parties in a joint venture leasing company or a wholly foreign-owned leasing company must comply with the Law on Credit Organizations and current laws.

36. Information, Reporting, and Statistical System: Reports of the leasing company must be presented in Vietnamese and in Vietnamese Dong. The leasing company must implement the information, reporting, and statistical system in accordance with current regulations and guidelines of the State Bank.

37. Within thirty (30) days from the date of the following changes, the leasing companies affiliated with credit organizations, joint venture leasing companies, and wholly foreign-owned leasing companies must notify the State Bank in writing:

a) Changes in the Chairman of the Board of Directors, General Director (Director) of the contributing parties.

b) Changes in the name and address of the contributing parties.

c) The contributing parties split, merge, consolidate, dissolve, or declare bankruptcy.

38. Audit:

38.1. At least thirty (30) days before the end of the fiscal year, the leasing company must select an external auditing organization, not an internal audit organization, to audit its activities. Such auditing organization must be approved by the State Bank.

38.2. Within 120 (one hundred twenty) days from the end of the fiscal year, the financial leasing company must submit its audited financial report to the State Bank of Vietnam.

Chapter VI.

INSPECTION, SPECIAL SUPERVISION, BANKRUPTCY

LIQUIDATION AND DISPUTE SETTLEMENT

39. Inspection:

39.1. The financial leasing company shall be subject to inspection and examination by the State Bank of Vietnam;

39.2. The inspection of the State Bank of Vietnam on the activities of the financial leasing company in Vietnam shall be carried out in accordance with the provisions of the Law on Credit Organizations and the inspection regulations of the State Bank of Vietnam.

40. Special supervision, bankruptcy, dissolution, and liquidation of the financial leasing company shall be implemented in accordance with the provisions of the Law on Credit Organizations and other current laws.

41. Commendation and handling of violations in financial leasing activities shall be carried out in accordance with the provisions of the Law on Credit Organizations, administrative penalty regulations in the field of currency and banking operations, regulations of the State Bank of Vietnam, and other current laws.

42. Disputes between the financial leasing company and the lessee, and disputes among shareholders participating in joint-stock financial leasing companies, joint venture financial leasing companies, and wholly foreign-owned financial leasing companies shall be resolved in accordance with the current regulations of Vietnamese law.

 

Chapter VII.

IMPLEMENTING PROVISIONS

43. Within 12 months from the date this Decree No. 16/2001/ND-CP dated May 2, 2001 of the Government on the organization and operation of financial leasing companies takes effect, financial leasing companies established and operating under licenses issued by the State Bank of Vietnam before the effective date of this Decree must adjust their organizational structure and operations in compliance with the provisions of this Circular and related guiding documents.

44. This Circular shall take effect 15 days from the date of signature.

45. The Director of the Office, Heads of Departments of Banking 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 financial leasing companies within their respective authority and duties shall be responsible for implementing this Circular.

46. Amendments and supplements to this Circular shall be decided by the Governor of the State Bank of Vietnam.

 

Appendix 01a

SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness

 

APPLICATION FOR LICENSE TO ESTABLISH AND OPERATE A FINANCIAL LEASING COMPANY

FOR FINANCIAL LEASE

Respectfully submitted to: Governor of the State Bank of Vietnam

On ... day ... month ... year ..., ...(name of credit institution) requests the State Bank of Vietnam to consider granting a license to establish and operate a financial leasing company:

1- Name of the financial leasing company:

Full name in Vietnamese:                                                    Abbreviated name:

Name in English:                     

Abbreviated name:

2- Head office location: (Head office address)

Telephone number, fax number...

3- Operating area:

4- Duration of operation:

5- Content and scope of operation:

6- Registered capital: (estimated)

In cash:

In kind: (if any)

7- Proposed management board structure (specify names, years of birth, nationalities of members), number of staff and employees.

8. We hereby commit:

a) To bear full responsibility for the truthfulness and accuracy of the contents of the Application and attached documents.

b) After obtaining the establishment and operation license, we will fully comply with all regulations prior to commencing operations.

c) Strictly abide by state laws and regulations of the State Bank of Vietnam, and accept legal responsibility if there is any violation.

                                     ..., day ... month ... year...

Attached documents include:  /Signed by the credit institution

Appendix 01b

SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness

APPLICATION FOR LICENSE TO ESTABLISH AND OPERATE A FINANCIAL LEASING COMPANY

FOR FINANCIAL LEASE

Respectfully submitted to: Governor of the State Bank of Vietnam

At the shareholders' meeting on ... day ... month ... year ..., the articles of association were adopted and the Board of Directors of the financial leasing company named was elected.

-----------------------------------------------------------------------------

Now, the Board of Directors, on behalf of the shareholders, requests the State Bank of Vietnam to consider granting a license to establish and operate a financial leasing company:

1- Name of the financial leasing company:

Full name in Vietnamese:    Abbreviated name:

Name in English:         

Abbreviated name:

2- Head office location: (Head office address)

Telephone number, fax number...

Proposed branch locations: (if any)

3- Operating area:

4- Duration of operation:

5- Scope and content of operations:

6- Registered capital: (estimated)

In cash:

In kind: (if any)

7- Proposed structure of the Board of Directors and Management Board, Supervisory Board

8. We hereby commit:

a) To bear full responsibility for the truthfulness and accuracy of the contents of the Application and attached documents.

b) After obtaining the establishment and operation license, we will fully comply with all regulations prior to commencing operations.

c) Strictly abide by state laws and regulations of the State Bank of Vietnam, and accept legal responsibility if there is any violation.

                                     ..., day ... month ... year...

Attached documents include:

                                                                        /Signed by the Board of Directors

  

Appendix 01c

SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness

 

APPLICATION FOR LICENSE TO ESTABLISH AND OPERATE A FINANCIAL LEASING COMPANY

FOR FINANCIAL LEASE

 

Respectfully submitted to: Governor of the State Bank of Vietnam

The parties involved in establishing a financial leasing company submit to the Governor of the State Bank of Vietnam an application to establish a financial leasing company in Vietnam.

A. Parties involved in establishment: (Specify each partner individually)

1- Full name and abbreviated name.

2 - Location of head office, business address, telephone number, fax number...

3 - Registered capital.

4- Date of establishment, date of business registration.

5 - Issuing authority of the business license, license number and date.

6- Issuing authority of the business registration certificate, registration certificate number and date.

B. Financial leasing company established in Vietnam:

1- Full name and abbreviated name (in Vietnamese, English).

2- Proposed location of head office and telephone number, fax number (if any)

3- Estimated registered capital (including: VND capital, foreign currency capital, asset capital) and contribution ratio of each party.

4- Duration of operation.

5- Scope and content of operations

6- Proposed structure of the Board of Directors and Management Board, Supervisory Board

7- Estimated number of staff and employees (including: number of Vietnamese nationals, number of foreigners).

8. We hereby commit:

a) To bear full responsibility for the truthfulness and accuracy of the contents of the Application and attached documents.

b) After obtaining the establishment and operation license, we will fully comply with all regulations prior to commencing operations.

c) Strictly abide by state laws and regulations of the State Bank of Vietnam, and accept legal responsibility if there is any violation.

..., day ... month ... year...

Attached documents (Legal representative or authorized person of each party signs and stamps)

Appendix 02

The main contents of the brief curriculum vitae include:

1/ Personal information:

Full name at birth:

Common name:

Nickname:

Place of origin:

Original nationality:

Current nationality:

Permanent residence address according to household registration, address according to ID card and current residence address:

ID card number (or passport number for foreigners):

Date and place of issuance of ID card (or passport for foreigners):

(In case an individual is appointed as the representative managing the share capital of a legal entity, they must declare and supplement the name and address of the legal entity)

Personal work experience:

Work history, profession, and previous positions held (from age 18 to present), where and what, summarize main features;

Educational qualifications, professional expertise, foreign languages (specify course, training period);

Awards:

Disciplinary Measures:

Current positions at other organizations, including: economic organizations, political and social organizations, other credit institutions.

Held position (if any) and elected/appointed position (pending approval by the Governor of the State Bank of Vietnam) at Joint Stock Commercial Banks.

2/ Family relations

Family relationships: Father, mother, spouse, children, full siblings of members of the Board of Directors, Supervisory Board, General Director (Director), must clearly state their full name, age, occupation, position, place of work for each individual.

3/ Legal commitment:

Commitment not to violate any provisions set forth in Article 3, Article 4 of the Regulations on the Organization and Operation of the Board of Directors, Supervisory Board, and General Director of Joint Stock Commercial Banks issued pursuant to Decision No. .../2001/QĐ-NHNN dated ..., 2001 of the Governor of the State Bank of Vietnam, and other relevant current laws, and shall be responsible under the law for this declaration.

4/ Signature (full name) of the declarant.

5/ Confirmation of the head of the agency or the competent authority (if the individual is working at a legal entity) or People's Committee of the commune where the individual has registered permanent residence (if the individual is not working at a legal entity).

 Appendix 3a

 

License

for establishment and operation of financial leasing companies

 

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on the State Bank of Vietnam and the Law on Credit Institutions dated December 12, 1997;

Pursuant to Decree No. 16/2001/NĐ-CP dated May 2, 2001 of the Government on the organization and operation of financial leasing companies;

Considering the application and dossier submitted by ...(name of state-owned enterprise or credit institution or board of directors of joint stock financial leasing company) on ...;

At the proposal of the Director of the Department of Banks and Non-Bank Financial Institutions;

 

DECISION:

Article 1: Granting license for establishment and operation to the following financial leasing company:

1. Name of the financial leasing company

Full name in Vietnamese:

Full name in English:

Abbreviated name in English:

Head office address:

Telephone number, Fax:

2. Charter capital of the financial leasing company is:

including:         

In Vietnamese dong:

In physical assets:

3. Duration of operation of the financial leasing company:

4. Activities of the financial leasing company:

Article 2: This license takes effect from the date of issuance.

Article 3: This license is made in original form, the credit institution retains one copy; one copy is granted to the financial leasing company; one copy is registered with the business registration authority; one copy is kept at the State Bank of Vietnam.

                        Appendix 3b

License

for establishment and operation of financial leasing companies

The Governor of the State Bank of Vietnam

Pursuant to the Law on the State Bank of Vietnam and the Law on Credit Institutions dated December 12, 1997;

Pursuant to Decree No. 16/2001/NĐ-CP dated May 2, 2001 of the Government on the organization and operation of financial leasing companies;

Considering the application and dossier submitted by ...(name of state-owned enterprise or credit institution or board of directors of joint stock financial leasing company) on ... for granting license for establishment and operation of a joint venture financial leasing company (or wholly foreign-owned financial leasing company);

At the proposal of the Director of the Department of Banks and Non-Bank Financial Institutions;

 

DECISION:

Article 1: Granting license for establishment and operation to the following financial leasing company:

1. Name of the financial leasing company

Full name in Vietnamese:

Full name in English:

Abbreviation:

Head office address; telephone number, Fax:

2. Parties contributing capital to the financial leasing company and the proportion of contribution of each party:

3. Charter capital of the joint venture financial leasing company (or wholly foreign-owned financial leasing company) is:

including:

In Vietnamese dong (if applicable)

In US dollars:

In physical assets:

4. Duration of operation of the financial leasing company:

5. Activities of the financial leasing company:

......

Foreign exchange operations

Article 2: This license takes effect from the date of issuance.

Article 3: This license is made in original form, the contributing parties retain one copy; one copy is granted to the financial leasing company; one copy is registered with the business registration authority; one copy is kept at the State Bank of Vietnam./.