Circular No. 10/2018/TT-NHNN on the documents, procedures, and formalities for approving changes in microfinance organizations

CIRCULAR

Regulations on documents, procedures, and formalities for approving changes

by microfinance organizations

Based on the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Organizations dated June 16, 2010;

Pursuant to the Law Amending and Supplementing Certain Provisions of the Law on Credit Institutions dated November 20, 2017;

Based on the Enterprise Law dated November 26, 2014;

Decree No. Decision No. 16/2017/NĐ-CP dated February 17, 2017, of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

At the proposal of the Inspectorate and Supervision Department;

The Governor of the State Bank of Vietnam issues a Circular stipulating the documents, procedures, and formalities for approving changes of microfinance organizations.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

1. This Circular specifies the documents, procedures, and formalities for approving changes of microfinance organizations, including:

a) Name and location of the main office;

b) Authorized capital amount;

c) Content, scope, and duration of operation;

d) Purchase, sale, transfer of ownership shares by owners; purchase, sale, transfer of capital contributions by shareholders;

đ) Temporary cessation of business operations for five working days or more, except in cases of cessation due to force majeure events.

2. The purchase, sale, or transfer of ownership shares leading to a change in the legal form of a microfinance organization shall be carried out in accordance with the regulations of the State Bank of Vietnam (hereinafter referred to as the State Bank) and relevant laws.

Article 2. Applicability

1. Microfinance organization.

2. Organizations and individuals related to the approval of changes in microfinance organizations as prescribed in this Circular.

Article 3. Preparation and Submission of Documents

1. The document requesting the State Bank's approval for changes specified in this Circular must be signed by the legitimate representative of the microfinance organization. In case of signing by an authorized representative, the document must include a power of attorney in compliance with the provisions of the law.

2. The document requesting the State Bank's approval for changes specified in this Circular must be prepared in one set in Vietnamese. Copies of documents, certificates, and translations of foreign language materials in the document must be certified in accordance with the provisions of the law.

3. In cases where the documents are copies that are not certified copies or copies issued from original records, when submitting the document, the original must be presented for verification, and the verifier must sign to confirm the copy and bear responsibility for its accuracy compared to the original.

4. The documents and notification letters of the microfinance organization sent to the State Bank may be submitted directly or through postal service.

Article 4. Approval Documents

Approving changes of microfinance organizations is implemented in the following forms:

1. Decision to amend and supplement the Business License (hereinafter referred to as the License) of the microfinance organization for cases specified in points a, b, and c of Clause 1, Article 1 of this Circular.

2. Approval document for cases specified in points d and đ of Clause 1, Article 1 of this Circular.

Chapter II

SPECIFIC PROVISIONS

Section 1

Change of name, main office location; charter capital;

content, scope, and duration of operation

Article 5. Change of Name

1. Application documents include:

a) Request for approval to change the name, including at least the following contents: name specified in the License, proposed new name ensuring compliance with relevant laws on naming, reasons for the change;

b) Decision of the Board of Members approving the change of name.

2. Procedure for implementing the approval process:

a) The microfinance organization prepares and submits the document according to the provisions of Clause 1 of this Article to the State Bank. If the document is incomplete, within three working days from the date of receipt of the document, the State Bank will issue a document requesting the microfinance organization to supplement the document;

b) Within thirty days from the date of receiving complete and valid documents, the State Bank issues a decision to amend and supplement the License of the microfinance organization; if rejected, the State Bank replies in writing and provides specific reasons.

Article 6. Change of Head Office Location

1. Application documents include:

a) Request for approval to change the main office location, including at least the following contents:

(ii) The proposed new location, clearly identifying: the building name (for rented office buildings), house number, street name (alley) or commune, ward, town, district, city, centrally-run city. The proposed new location must meet the following conditions:

(ii) Proposed new location, clearly specifying: building name (for rented office buildings), house number, street name (alley) and village, ward, town, district, city, provincial-level municipality. The proposed new location must comply with the State Bank's regulations on main office locations;

(iii) Reason for the change;

(iv) Plan for transferring the main office to ensure continuity in operations;

b) Decision of the Board of Members approving the change of main office location;

c) Documents proving that the microfinance organization has lawful rights to use or own the new head office location.

2. Procedure for implementing the approval process:

a) The microfinance organization prepares and submits the document according to the provisions of Clause 1 of this Article to the State Bank. If the document is incomplete, within three working days from the date of receipt of the document, the State Bank will issue a document requesting the microfinance organization to supplement the document;

b) Within thirty days from the date of receiving complete and valid documents, the State Bank issues a decision to amend and supplement the License of the microfinance organization; if rejected, the State Bank replies in writing and provides specific reasons.

3. Within twelve months from the date the State Bank issues a decision to amend and supplement the License for changing the main office location, the microfinance organization must operate at the new location. Beyond this period, if the microfinance organization does not operate at the new location, the decision to amend and supplement the License becomes invalid.

4. At least fifteen days before operating at the new location, the microfinance organization must send a notice to the State Bank branch in the province or centrally-administered city (hereinafter referred to as the State Bank branch) where the main office is located about the expected start date of operations at the new location. The microfinance organization cannot operate at the new location if the main office does not meet the State Bank's regulations on main office locations for microfinance organizations.

5. In cases of address changes without resulting in a change in the main office location, the microfinance organization sends the State Bank a notice of the change in the address of the main office and requests to amend and supplement the License regarding the change in the address of the main office.

Within ten working days from the date of receipt of the request document from the microfinance organization, the State Bank issues a decision to amend and supplement the License for the change in the address of the main office of the microfinance organization.

Article 7. Changing the Content and Scope of Operations

1. Application documents include:

a) Request for approval to change the content and scope of operations, including at least the following contents:

(i) The proposed content and scope of operations for approval;

(ii) Reasons and necessity for changing the content and scope of operations;

b) Decision of the Board of Members approving the change in the content and scope of operations;

c) Implementation plan for the content and scope of operations, including at least the following contents: description of the changed content and scope, implementation process, analysis of effectiveness and risk prevention and control measures, business plan, implementation schedule;

d) Draft internal regulations on the process for implementing business activities to ensure management and risk control.

2. Procedure for implementing the approval process:

a) The microfinance organization prepares and submits the document according to the provisions of Clause 1 of this Article to the State Bank. If the document is incomplete, within three working days from the date of receipt of the document, the State Bank will issue a document requesting the microfinance organization to supplement the document;

b) Within thirty days from the date of receiving complete and valid documents, the State Bank issues a decision to amend and supplement the License of the microfinance organization; if rejected, the State Bank replies in writing and provides specific reasons.

Article 8. Changing the Term of Operation

1. Application documents include:

a) Request for approval to change the duration of operations, including at least the following contents:

(i) The operating period specified in the Business License;

(ii) The proposed changed operating period;

(iii) Reasons for changing the operating period;

b) An overview report on organizational and operational conditions, including:

(i) Assessment of operational results in the last five years, including key performance indicators related to capital structure, capital utilization, and business outcomes; organizational and operational activities of the management and supervisory bodies, internal audit system, and internal control system;

(ii) Objectives and business plans for the next three years;

c) Decision of the Board of Members approving the change in the duration of operations.

2. Procedure for implementing the approval process:

a) At least 180 days before the end of the operating period, the microfinance organization shall prepare and submit to the State Bank of Vietnam the dossier as prescribed in Clause 1 of this Article. In case the dossier is incomplete, within three working days from the date of receipt of the dossier, the State Bank of Vietnam shall issue a document requesting the microfinance organization to supplement the dossier.

b) Within thirty days from the date of receiving complete and valid documents, the State Bank issues a decision to amend and supplement the License of the microfinance organization; if rejected, the State Bank replies in writing and provides specific reasons.

Article 9. Changing the Registered Capital

1. Application documents include:

a) The document proposing approval for an increase in the charter capital, which must minimally include the following contents:

(i) The level of charter capital specified in the License;

(ii) The expected level of increased charter capital;

(iii) The reasons and necessity for increasing the charter capital;

(iv) The sources of funds for increasing the charter capital;

(v) The plan and expected time to complete the increase in charter capital;

(vi) The ratio of contributions of members (in cases where the increase in charter capital leads to changes in the contribution ratios of members);

(vii) The expected plan for using the additional charter capital in business operations; the ability to manage, operate, and control risks with the new scale of charter capital;

b) The decision of the Board of Members approving the increase in the charter capital;

c) The decision of the owner or the document of contributors approving the increase in the charter capital of the microfinance organization;

d) For cases of increasing the charter capital due to additional contributions from the owner or contributors, in addition to the dossier components prescribed in points a, b, and c of this clause, the microfinance organization shall supplement the following documents:

(i) Commitment document of the owner or shareholder using legitimate funds to contribute or add capital according to the plan for increasing the regulatory capital of the microfinance organization;

(ii) The confirmation document of the Stock Exchange of the State Bank of Vietnam or the State Bank of Vietnam branch where the main office of the microfinance organization is located regarding the additional charter capital deposited into the frozen account.

đ) For cases of increasing the charter capital due to new contributors, in addition to the dossier components prescribed in points a, b, c, and d of this clause, the microfinance organization shall supplement the new contributor's dossier as required for the founding member of the microfinance organization according to the State Bank of Vietnam's regulations on issuing Licenses, organizing, and operating microfinance organizations.

2. Procedure for implementing the approval process:

a) The microfinance organization prepares and submits the document according to the provisions of Clause 1 of this Article to the State Bank. If the document is incomplete, within three working days from the date of receipt of the document, the State Bank will issue a document requesting the microfinance organization to supplement the document;

b) Within thirty days from the date of receiving a complete and valid dossier, the State Bank of Vietnam shall issue a decision to amend and supplement the License of the microfinance organization; if it rejects, the State Bank of Vietnam shall reply in writing and specify the reasons.

Section 2

Briefly describe technical improvements, production processes, raw materials, designs; new technology applications such as automation, digitalization, clean technology; management, marketing, distribution solutions; products winning awards or certifications related to innovation…):…sale, transfer of shareholding interest

Article 10. Purchase and Transfer of Contributed Capital Shares Between Current Shareholders of a Microfinance Organization that is a Limited Liability Company with Two or More Members

1. Application documents include:

a) The document proposing approval for the purchase, sale, or transfer of shareholding interest signed by the legal representative of the microfinance organization, which clearly states:

(i) The name and main address of the seller, buyer, transferor, and transferee; the ratio of purchase, sale, or transfer of shareholding interest; the ownership ratio and value of shareholding interest of contributors before and after the purchase, sale, or transfer of shareholding interest;

(ii) The reasons for the purchase, sale, or transfer;

(iii) Expected date for the purchase and transfer to be carried out;

b) The decision of the Board of Members approving the purchase, sale, or transfer of shareholding interest;

c) A document from the buyer and transferee committing to the legality of the source of funds used to purchase and accept the transfer of contributed capital shares;

d) The commitment document for the purchase, sale, or transfer of shareholding interest between the seller, transferor, and buyer, transferee.

2. Procedure for implementing the approval process:

a) The microfinance organization prepares and submits the document according to the provisions of Clause 1 of this Article to the State Bank. If the document is incomplete, within three working days from the date of receipt of the document, the State Bank will issue a document requesting the microfinance organization to supplement the document;

b) Within thirty days from the date of receiving a complete and valid dossier, the State Bank of Vietnam shall consider and approve the proposal for the purchase, sale, or transfer of shareholding interest of the microfinance organization; if it rejects, the State Bank of Vietnam shall reply in writing and specify the reasons.

3. Within thirty days from the date the State Bank of Vietnam issues the approval document, the parties involved in the purchase, sale, or transfer must complete the purchase, sale, or transfer of shareholding interest. Beyond this period, if the parties involved in the purchase, sale, or transfer fail to complete the purchase, sale, or transfer of shareholding interest, the State Bank of Vietnam's approval document becomes invalid.

Within five working days from the date of completing the purchase, sale, or transfer of shareholding interest, the microfinance organization shall notify the State Bank of Vietnam that the purchase, sale, or transfer of shareholding interest has been completed.

Within ten working days from the date of receiving the notification of completion of the purchase, sale, or transfer of shareholding interest from the microfinance organization, the State Bank of Vietnam shall issue a decision to amend and supplement the License of the microfinance organization.

Article 11. Purchase and transfer of share capital between existing contributing members and new contributing members (the buyer, the transferee) of a microfinance organization that is a limited liability company with two or more members

1. Application documents include:

a) A document requesting approval for the purchase and transfer of share capital, specifying:

(i) The name and main address of the seller, buyer, transferor, and transferee; the ratio of purchase and transfer of share capital; the ownership ratio and value of share capital of contributing members before and after the purchase and transfer of share capital;

(ii) The reasons for the purchase, sale, or transfer;

(iii) Expected date for the purchase and transfer to be carried out;

b) The decision of the Board of Members approving the purchase, sale, or transfer of shareholding interest;

c) The written commitment for the purchase and transfer of share capital between the existing contributing member and the new contributing member;

d) A document from the buyer and transferee committing to use legitimate sources of funds to purchase and accept the transfer of share capital of the microfinance organization;

đ) Documents and materials proving compliance with the conditions regarding contributing members and the ownership ratio of share capital as prescribed by the State Bank of Vietnam in issuing licenses, organizing, and operating microfinance organizations, including:

(i) Documentation for new contributing members that are organizations:

- License for establishment or business registration certificate or equivalent document;

- Charter of the organization;

- Authorization document for the representative of the share capital at the microfinance organization according to the law;

- Curriculum vitae of the share capital representative according to Model Form No. 01 issued together with this Circular, judicial record according to the law (including expunged criminal records and unexpunged criminal records);

- Copy of Identity Card or Citizen Identification Card or Passport of the legal representative of the organization and the representative of the share capital at the microfinance organization;

- Audited financial statements of the year immediately preceding the submission of the application and the most recent financial statement (interim financial report or unaudited annual report) up to the date of submitting the application for accepting the transfer of share capital (for new contributing members that are enterprises);

- Report on activities over the last two consecutive years immediately preceding the year of submitting the application for purchasing and accepting the transfer of share capital (for new contributing members that are not enterprises);

- Document from the competent authority of the home country providing information on compliance with banking laws and other relevant laws over the last five consecutive years immediately preceding the year of submitting the application for purchasing and accepting the transfer of share capital and up to the date of submitting the application for obtaining a license (for new contributing members that are foreign banks);

- Declaration form of related parties of the organization according to Model Form No. 02 issued together with this Circular;

(ii) Documentation for new contributing members that are individuals:

- Curriculum vitae according to Model Form No. 01 issued together with this Circular, judicial record according to the law;

- Copy of Identity Card or Citizen Identification Card or Passport;

- Declaration form of related parties of the individual according to Model Form No. 02 issued together with this Circular.

2. Procedure for implementing the approval process:

a) The microfinance organization prepares and submits the document according to the provisions of Clause 1 of this Article to the State Bank. If the document is incomplete, within three working days from the date of receipt of the document, the State Bank will issue a document requesting the microfinance organization to supplement the document;

b) Within thirty days from the date of receiving a complete and valid dossier, the State Bank of Vietnam shall consider and approve the proposal for the purchase, sale, or transfer of shareholding interest of the microfinance organization; if it rejects, the State Bank of Vietnam shall reply in writing and specify the reasons.

3. Within thirty days from the date the State Bank of Vietnam issues the approval document, the parties involved in the purchase, sale, or transfer must complete the purchase, sale, or transfer of shareholding interest. Beyond this period, if the parties involved in the purchase, sale, or transfer fail to complete the purchase, sale, or transfer of shareholding interest, the State Bank of Vietnam's approval document becomes invalid.

Within five working days from the date of completing the purchase, sale, or transfer of shareholding interest, the microfinance organization shall notify the State Bank of Vietnam that the purchase, sale, or transfer of shareholding interest has been completed.

Within ten working days from the date of receiving the notification of completion of the purchase, sale, or transfer of shareholding interest from the microfinance organization, the State Bank of Vietnam shall issue a decision to amend and supplement the License of the microfinance organization.

Article 12. Purchase and transfer of share capital of the owner of a microfinance organization that is a single-member limited liability company

1. Application documents include:

a) A document requesting approval for the purchase and transfer of share capital of the owner, specifying:

(i) The name and main address of the seller, transferor, buyer, and transferee;

(ii) Reason for the purchase and transfer;

(iii) Anticipated time for the purchase and transfer.

b) Decision of the owner approving the purchase and transfer of share capital;

c) Request document for purchasing, accepting the transfer of share capital contributions signed by the authorized representative of the buyer and transferee;

d) A document from the buyer and transferee committing to use legitimate sources of funds to purchase and accept the transfer of share capital of the microfinance organization;

đ) A commitment document for the purchase and transfer of share capital between the owner of the microfinance organization and the buyer and transferor;

e) Documentation proving that the buyer and transferee of the share capital meet the conditions regarding the owner as prescribed by the State Bank of Vietnam in issuing licenses, organizing, and operating microfinance organizations.

2. Procedure for implementing the approval process:

a) The microfinance organization prepares and submits the document according to the provisions of Clause 1 of this Article to the State Bank. If the document is incomplete, within three working days from the date of receipt of the document, the State Bank will issue a document requesting the microfinance organization to supplement the document;

b) Within thirty days from the date of receiving complete and valid documents, the State Bank of Vietnam will consider and approve the request for the purchase and transfer of share capital of the owner of the microfinance organization; if it rejects the request, the State Bank of Vietnam will respond in writing and specify the reasons.

3. Within thirty days from the date of the State Bank of Vietnam's approval document, the parties involved in the purchase and transfer must complete the purchase and transfer of share capital and notify the State Bank of Vietnam that the purchase and transfer have been completed. If the parties involved in the purchase and transfer fail to complete the purchase and transfer within this period, the State Bank of Vietnam's approval document becomes invalid.

Within five working days from the completion of the purchase and transfer of share capital, the microfinance organization must notify the State Bank of Vietnam that the purchase and transfer have been completed.

Within ten working days from the date of receiving the notification of completion of the purchase, sale, or transfer of shareholding interest from the microfinance organization, the State Bank of Vietnam shall issue a decision to amend and supplement the License of the microfinance organization.

Section 3

Suspension of business operations for five working days or more, except in cases of force majeure events

Article 13. Suspension of business operations for five working days or more, except in cases where suspension is due to force majeure events.

1. Application documents include:

a) A request for approval of the suspension of business operations, which must minimally include the following contents:

(i) The number of days and time period expected for the suspension of business operations;

(ii) The reasons for the suspension of business operations;

b) The decision of the Board of Members approving the suspension of business operations;

c) Documentation proving the necessity of suspending business operations;

d) A plan to handle risks arising from the suspension of business operations, including anticipated measures to be implemented to minimize the impact of the suspension on the rights and interests of customers.

2. Procedure for implementing the approval process:

a) At least 60 days before the planned date of suspension of business operations, the microfinance organization shall submit a dossier in accordance with Clause 1 of this Article to the State Bank. In case the dossier is incomplete, within three working days from the date of receipt of the dossier, the State Bank will issue a document requesting the microfinance organization to supplement the dossier;

b) Within 25 days from the date of receiving a complete and valid dossier, the State Bank will issue a document approving the suspension of business operations for five working days or more by the microfinance organization; in case of rejection, the State Bank will reply in writing and specify the reasons.

3. After receiving the State Bank's approval document regarding the suspension of business operations, at the latest three working days before the date of suspension of business operations, the microfinance organization has the responsibility to notify customers, publicly post the time and reason for the suspension of business operations at transaction locations.

Chapter III

RESPONSIBILITIES OF RELATED UNITS

Article 14. Responsibilities of the Banking Inspection and Supervision Authority

1. The entity responsible for receiving dossiers and reviewing them for submission to the Governor of the State Bank for consideration and decision on changes in the microfinance organization as stipulated in this Circular.

2. Submitting for the Governor of the State Bank to issue a document seeking opinions:

a) The People's Committee of the province or centrally-administered city where the microfinance organization requests to move its headquarters to, concerning the change of the location of the headquarters of the microfinance organization if the new location is outside the province or centrally-administered city where the current headquarters is located.

b) The People's Committee of the province or centrally-administered city where the microfinance organization's headquarters is located, concerning the purchase, transfer, or sale of shares held by the owner.

3. Seeking opinions from the State Bank branch where the microfinance organization's headquarters is located in the following cases:

a) Changes in the name or location of the headquarters of the microfinance organization;

b) Changes in the term of operation of the microfinance organization;

c) Purchase and transfer of ownership shares of the microfinance organization.

4. Notifying the State Bank branch where the microfinance organization's headquarters is located about the approved documents, Decisions to amend and supplement the License regarding the changes of the microfinance organization.

Article 15. Responsibilities of the State Bank of Vietnam Branch

1. Inspecting compliance with all conditions for the main office when receiving the notification document from the microfinance organization about the expected start date of operations at the new location before the microfinance organization begins operating at the new location.

2. Participating in opinions upon request of the Banking Inspection and Supervision Authority regarding changes in the duration of operation and the purchase, transfer, or sale of shares held by the owner of the microfinance organization.

Article 16. Responsibilities of Microfinance Organizations

1. Shall be responsible under the law for the accuracy and completeness of the information provided in the application dossier.

2. When approved to change one or more contents stipulated in Clause 1, Article 1 of this Circular, the microfinance organization must implement:

a) Amend and supplement the Charter of the microfinance organization in accordance with the approved changes;

b) Register with competent state authorities regarding the changed contents in accordance with the law;

c) Announcing on the State Bank's electronic information portal, publicly notifying at the main office of the microfinance organization and in three consecutive issues of a daily newspaper or on a Vietnamese online news site about the changes specified in Points a, b, and c of Clause 1 of Article 1 of this Circular within seven working days from the date of State Bank's approval.

Chapter IV

IMPLEMENTING PROVISIONS

Article 17. Transitional Provisions

Microfinance organizations that have submitted valid dossiers requesting approval for changes in one or several contents stipulated in Clause 1 of Article 1 of this Circular before the Circular takes effect and comply with the laws at that time may continue to implement according to the current laws or modify their dossiers to comply with the provisions of this Circular.

Article 18. Effective Date

1. This Circular takes effect from June 1, 2018.

2. From the date this Circular takes effect, the following provisions shall cease to be effective:

a) Circular No. 02/2008/TT-NHNN dated April 2, 2008, issued by the Governor of the State Bank guiding the implementation of Decree No. 28/2005/NĐ-CP dated March 9, 2005, of the Government on the organization and operation of small-scale financial institutions in Vietnam and Decree No. 165/2007/NĐ-CP dated November 15, 2007, of the Government amending, supplementing, and abolishing certain Articles of Decree No. 28/2005/NĐ-CP dated March 9, 2005, of the Government on the organization and operation of small-scale financial institutions in Vietnam;

b) Article 9 of Circular No. 24/2011/TT-NHNN dated August 31, 2011, issued by the Governor of the State Bank on implementing the simplified administrative procedures for establishment and operation of banks in accordance with the Government's Resolutions on simplifying administrative procedures under the State Bank's management functions.

Article 19. Implementation

The Director of the Office, the Head of the Banking Inspection and Supervision Authority, the Heads of units under the State Bank of Vietnam, the Governors of the State Bank branches in provinces and cities, the Chairmen of the Board of Members, and General Managers (Directors) of microfinance organizations are responsible for organizing the implementation of this Circular./.