Circular No. 08/2006/TT-NHNN guiding the joint financing leasing activities of financial leasing companies as prescribed in Government Decree No. 16/2001/NĐ-CP dated May 2, 2001 on the organization and operation of financial leasing companies and Government Decree No. 65/2005/NĐ-CP dated May 19, 2005 amending and supplementing certain articles of Government Decree No. 16/2001/NĐ-CP dated May 2, 2001 on the organization and operation of financial leasing companies.

CIRCULAR

Guidelines for joint venture financial leasing operations of financial leasing companies as stipulated in

Decree No. 16/2001/NĐ-CP dated May 2, 2001 of the Government on the organization and operation of financial leasing companies and Decree No. 65/2005/NĐ-CP dated May 19, 2005 of the Government

amending and supplementing certain articles of Decree No. 16/2001/NĐ-CP dated May 2, 2001 of the Government on the organization and operation of financial leasing companies

"Provisions on amending and supplementing certain articles of Decree No. 16/2001/NĐ-CP dated May 2, 2001 of the Government on the organization and operation of financial leasing companies"

4. Currency used in joint venture leasing transactions:

__________________

Pursuant to point b, Clause 2, Article 31 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 issues guidelines for joint venture financial leasing operations of financial leasing companies as follows:

2. Applicability:

These Circulars guide joint venture financial leasing operations of financial leasing companies for organizations and individuals, both domestic and foreign, operating in Vietnam with the need to lease assets such as machinery, equipment, transportation means, and other chattels to implement production, business, service projects or investment projects serving domestic life (referred to as projects). These Circulars do not guide joint venture financial leasing operations abroad.

2. Explanation of Terms:

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

2.1 Joint venture financial leasing (referred to as joint venture leasing): Is the financial leasing activity of a group of financial leasing companies (two or more financial leasing companies) towards the lessee, organized by one financial leasing company as the lead.

2.2 Joint venture lessor: Is a group of financial leasing companies established and operating under Vietnamese law (two or more financial leasing companies) cooperating with each other to carry out joint venture leasing towards the lessee as prescribed in these Circulars.

2.3 Member: Is a financial leasing company or branch of a financial leasing company authorized according to the law and approved to participate in joint venture leasing for a project in specific forms that the member implements.

2.4 Lead organization for joint venture leasing: Is the member chosen and entrusted by participating financial leasing companies to be responsible for leading joint venture leasing.

2.5 Lead organization for payment transactions: Is the member chosen and committed by the remaining members to perform specific payment transactions in joint venture leasing activities.

2.6 Lessee: Are organizations and individuals from Vietnam and abroad as specified in the State Bank of Vietnam's guidelines on financial leasing activities and entrusted financial leasing services.

2.7 Joint venture agreement: Is a written commitment between participating members regarding their rights and obligations during joint venture leasing.

2.8 Joint venture leasing agreement: Is a written commitment regarding the rights and obligations of the group of members or individual members or the lead organization for joint venture leasing towards the lessee concerning financial leasing as prescribed by laws on financial leasing activities, these Circulars, and other relevant laws.

3 Circumstances for applying joint venture leasing:

3.1 The lessee's financial leasing needs exceed the financial leasing limit of a single financial leasing company (30% of the financial leasing company's own capital for a single customer and 80% of the company's own capital for a related customer group).

3.2 The financial capacity, sources of funds, and assets of a single financial leasing company cannot meet the financial leasing needs.

3.3 The financial leasing company's risk diversification needs.

3.4 The lessee's need to lease from multiple financial leasing companies.

The currency used in joint venture leasing transactions shall be the Vietnamese dong. In cases where joint venture leasing transactions are conducted in foreign currencies, the parties shall comply with the provisions of the law on foreign exchange management and the provisions of the law on financial leasing.

6. Principles for implementing joint venture leasing:

5 Principles for organizing joint venture leasing:

5.1 Members voluntarily participate and agree on all aspects of the joint venture leasing.

5.2 Select the lead organization for joint venture leasing and the lead organization for payment transactions.

5.3 All transactions related to financial leasing between members and between the joint venture lessor and the lessee must be recorded in the joint venture leasing agreement.

7.1. Members must agree on the rate and method of collecting leasing interest. The leasing interest rate enjoyed by each member shall be reasonably determined according to the agreement among the members and in compliance with the regulations on financial leasing as well as other relevant laws.

6 Principles for implementing joint venture leasing:

6.1 Joint venture leasing under any specific form, conditions for joint venture leasing, application of security measures, and other operational measures in the financial leasing transaction during joint venture leasing shall be carried out in accordance with the Government's regulations and the State Bank of Vietnam's guidelines on financial leasing activities and entrusted financial leasing services, the charter of the financial leasing company, and other relevant laws.

6.2 Members must agree on the appraisal method for the project, which may involve establishing an Appraisal Board or not, but must ensure consistency among members regarding the effectiveness and feasibility of the project.

6.3 The joint venture lessor must regularly monitor the use of leased assets and cooperate with the lessee to address any arising issues.

7.1. Members must agree on the amount and method of collecting leasing interest. The amount of leasing interest enjoyed by each member shall be reasonably determined according to the agreement among members and in compliance with the provisions on financial leasing as well as other relevant legal regulations.

7 Lease interest, fees, and charges in joint venture leasing:

7.1 Members must agree on the rate and method of collecting lease interest. The lease interest rate enjoyed by each member is determined reasonably through mutual agreement among members and must comply with financial leasing regulations and other relevant laws.

7.2 Any costs incurred during joint venture leasing are agreed upon in the joint venture agreement and the joint venture leasing agreement according to current regulations on fees and charges.

8.2. Immediately after preliminary assessment, the financial leasing company must identify the participants for joint leasing and send out a joint leasing invitation letter along with the preliminary assessment results to these organizations if the financial leasing project is feasible and meets the conditions for joint leasing. If the project does not meet the conditions, the organization receiving the application must respond in writing to the customer, clearly stating the reasons for refusing the financial leasing transaction. The time from receipt of all documents to responding to the lessee shall not exceed seven working days.

8.3. The joint leasing invitation letter must include the basic contents of the financial leasing project (name and address of the lessee, leasing conditions, details and value of the asset, method of participating in joint leasing, term of joint leasing, interest rate, types of fees, lease payments related to the implementation of the financial leasing transaction), accompanied by the lessee's business plan.

9. Joint leasing coordination:

9.1. Within the timeframe proposed by the financial leasing company for inviting joint leasing participation, after studying the financial leasing proposal, the invited participant must decide whether to participate in joint leasing based on the proposals of the inviting organization, accompanying documents, their own financial capacity, and current regulations, and must respond in writing to the inviting organization's proposal.

9.2. If the demand for joint leasing is not fully met, the lead organization may invite other financial leasing companies to participate.

9.3. The maximum time for preliminary assessment, invitation, and response to the lessee regarding the joint leasing proposal is twenty working days from the date of receipt of all documents.

9.4. For complex projects requiring more time for review and assessment, the lead organization for joint leasing must agree with the participants on extending the assessment period and must notify the lessee in writing.

9.5. Invitations for joint leasing can be conducted through various methods, but the approval of the participants must be documented and sent in writing. Once sufficient joint leasing participants have been invited, the participants must agree among themselves on selecting the lead organization for joint leasing.

10. Project Assessment for Joint Leasing:

10.1. Joint leasing providers must choose and agree on the method of assessing the joint leasing project, but in any case, the original assessment file must be kept at the lead organization, and the assessment results must be sent to the participants and stored at the lead organization for joint leasing.

10.2. The assessment results must contain essential information about the project, the financial capability, and the ability to fulfill obligations of the lessee towards the joint leasing provider.

11. Joint Venture Contract:

11.1. The joint venture contract must include agreements from the participants on the following main contents:

11.1.1. Participants in joint leasing.

11.1.2. Lead organization for joint leasing and payment lead organization.

11.1.3. Lessee, capital structure, and funding plan to implement the joint leasing transaction.

11.1.4. Method and results of project assessment for joint leasing.

11.1.5. Form of joint leasing.

11.1.6. Contents of joint leasing:

a. Types of assets for joint leasing and sources of funds to form the asset, divided among each participant.

b. Specific agreements on the right to name the leased asset, responsibility for registering ownership rights over the asset, responsibility for registering the financial leasing transaction, responsibility for managing the leased asset, responsibility for recovering the leased asset in cases stipulated by law, responsibility for managing collateral for the financial lease.

c. Specific agreements on interest, fees, and charges in joint leasing.

d. Specific contents of each form of joint leasing according to current regulations for the type of leased asset, value of the leased asset, lease term, lease payment, delivery method of the asset, and other agreed contents between the participants.

11.1.7. Responsibilities of each participant, lead organization for joint leasing, and payment lead organization in signing and implementing joint leasing contracts with the lessee and among themselves.

11.1.8. Methods of collecting lease payments, paying interest, fees, and charges to the lessee and among participants.

11.1.9. Methods and responsibilities for exchanging information among participants related to the implementation of the joint leasing transaction, production and business plans of the lessee.

11.1.10. Risk management and disputes resolution among participants, principles for handling issues arising during the implementation of joint leasing.

11.1.11. Record keeping.

11.2. Other contents agreed upon by the participants in joint leasing.

11.3. The specific contents of the joint venture contract must comply with the provisions of the Civil Code, this Circular, and relevant laws.

11.4. Based on the joint venture contract and the joint leasing contract, the payment lead organization signs a commitment to ensure payment to the participants. The payment commitment includes contents related to the obligations and responsibilities of each party in performing payment transactions arising during the implementation of joint leasing in accordance with the payment agreements in the joint venture contract and the joint leasing contract.

11.5. Fees for payment transactions are agreed upon by the participants and not charged to the lessee.

11.6. The joint venture contract must be prepared in multiple copies, each having equal validity, and each participant retains one copy.

12. Joint Leasing Contract:

12.1. The content of the joint leasing contract must comply with the provisions of the Circular guiding financial leasing activities and entrusted financial leasing services, and necessary related contents agreed upon in the joint venture contract.

12.2. In cases where the parties agree to sign a single unified contract instead of separate joint venture and joint leasing contracts, the content of this contract must include all requirements of the two replaced contracts.

13. Implementation of Financial Leasing According to the Contract:

13.1. Each member shall strictly comply with the current regulations applicable to each form of financial lease as committed in the joint venture contract and the joint lease contract.

13.2. The lead leasing organization has the responsibility to monitor and urge members and lessees to fulfill their commitments under the joint lease contract.

14. Obligation to provide information:

14.1. The lessee shall be responsible for reporting fully on its financial status and operations to the lead leasing organization for post-leasing monitoring and inspection purposes.

14.2. The lead leasing organization must promptly and fully inform members about the results of capital usage inspections and related information for discussion and agreement on measures to address issues when necessary.

14.3. Members shall exchange information regarding the implementation of the joint lease contract according to the agreement in the joint lease contract.

14.4. The lead leasing organization must send copies of the joint lease contract and relevant situation reports to the State Bank (State Bank Inspectorate) for supervision and support as needed.

15. Inspection, risk management, and dispute resolution:

15.1. Members must regularly inspect the lessee's performance of the joint lease contract and the management and use of capital according to contracts signed between the parties and current regulations.

15.2. In case risks arise during the joint leasing process, members shall negotiate and agree with the lessee to handle them in accordance with the joint lease contract and current regulations.

15.3. Any disputes arising from breaches of the joint venture contract or the joint lease contract shall be resolved through negotiation and agreement among the parties. If unresolved, legal proceedings may be initiated in accordance with the law.

16. Implementation:

16.1. This Circular shall take effect fifteen days after its publication in the Official Gazette.

16.2. Based on the contents of this Circular and relevant laws, the Chairman of the Board of Directors, General Director (Director) of financial leasing companies shall issue specific guidelines suitable for the operational characteristics of each financial leasing company and organize its implementation.

16.3. The Head of the Accounting and Finance Department shall be responsible for guiding accounting entries for joint leasing transactions. Heads of units under the Central State Bank, Governors of State Bank branches in provinces and centrally-administered cities shall, based on their assigned functions and tasks, be responsible for directing and supervising the implementation of this Circular./.

CERTIFIED BY THE GOVERNOR
DEPUTY DIRECTOR

(Signed)

 Nguyễn Đồng Tiến