Decree No. 13/1999/ND-CP On the organization and operation of foreign credit organizations and representative offices of foreign credit organizations in Vietnam

DECREE

Regarding the organization and operation of foreign credit institutions, the representative offices of foreign credit institutions in Vietnam

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THE GOVERNMENT

Pursuant to the Government Organization Law dated September 30, 1992;

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated December 12, 1997;

Based on the Law on Credit Organizations No. 02/1997/QH10 dated December 12, 1997;

At the proposal of the Governor of the State Bank,

DECREE:

Chapter 1:

GENERAL PROVISIONS

Article 1. This Decree stipulates the organization and operation of foreign credit institutions, representative offices of foreign credit institutions in Vietnam.

Article 2.

1. Foreign credit organizations permitted to operate in Vietnam shall do so in the following forms:

a) Branches of foreign banks ;

b) Joint venture banks;

c) Non-bank credit institutions: Joint venture financial leasing companies; Financial leasing companies with 100% foreign capital; Joint venture finance companies; Finance companies with 100% foreign capital and other non-bank credit institutions.

2. Foreign credit institutions may establish representative offices in Vietnam.

Article 3. The State Bank of Vietnam (hereinafter referred to as the State Bank) is the agency responsible for issuing and revoking licenses, managing, and inspecting the activities of various types of foreign credit institutions operating in Vietnam. Licensing is considered based on the development of the economy and the financial market of Vietnam.

Article 4.

1. A branch of a foreign bank is a subsidiary of a foreign bank, guaranteed by the foreign bank to be responsible for all obligations and commitments of the branch in Vietnam. A branch of a foreign bank has rights and obligations as prescribed by Vietnamese law, operates under the Branch Establishment License and relevant provisions of Vietnamese law.

2. Branches of the same foreign bank permitted to operate in Vietnam are independent units, dependent on the foreign bank and funded by the foreign bank for their operations.

Article 5.

1. A joint venture bank is a bank established through the contribution of Vietnamese Parties (including one or more Vietnamese banks) and Foreign Parties (including one or more foreign banks) based on a joint venture agreement. A joint venture bank is a Vietnamese legal entity, headquartered in Vietnam, operating under the Establishment and Operation License and relevant provisions of Vietnamese law.

2. Branches of a joint venture bank are subsidiaries of the joint venture bank.

Article 6.

1. Joint venture financial leasing companies, joint venture finance companies are non-bank credit institutions established through the contribution of Vietnamese Parties and Foreign Parties based on a joint venture agreement, are Vietnamese legal entities, headquartered in Vietnam, operating under the Establishment and Operation License and relevant provisions of Vietnamese law.

2. Financial leasing companies with 100% foreign capital, finance companies with 100% foreign capital are established with 100% capital from foreign credit institutions, are Vietnamese legal entities headquartered in Vietnam, operating under the Establishment and Operation License and relevant provisions of Vietnamese law.

Article 7. The representative office of a foreign credit institution is a subsidiary of the foreign credit institution located in Vietnam, operating under Vietnamese law. The representative office of a foreign credit institution shall not engage in business activities in Vietnam.

Article 8.

1. Overseas supervisory and inspection authorities, foreign banks with branches in Vietnam may inspect and examine the operations of foreign bank branches operating in Vietnam. Prior to inspection and examination, overseas supervisory and inspection authorities, foreign banks must notify the State Bank in writing about the content, start date, and end date of the inspection and examination.

2. After completing the inspection and examination of foreign bank branches in Vietnam, overseas supervisory and inspection authorities, foreign banks must report to the State Bank the results of the inspection and examination within thirty days from the end date of the inspection and examination.

Article 9.

Official transaction documents of foreign credit institutions operating in Vietnam with Vietnamese state agencies must be in Vietnamese or in Vietnamese and a commonly used foreign language.

2. Documents in the application file for a License of foreign credit institutions must be in Vietnamese and a commonly used foreign language.

Chapter 2:

ORGANIZATION AND MANAGEMENT

Article 10. Foreign credit institutions are allowed to operate in Vietnam when they meet the conditions specified in Article 106 of the Law on Credit Institutions and must be granted an Establishment and Operation License, a Branch Establishment License, or a Representative Office Establishment License (hereinafter collectively referred to as the License) by the State Bank.

Article 11.

1. The application file for a License of a foreign credit institution submitted to the State Bank for consideration of issuance of a License shall be prepared in accordance with Article 108 of the Law on Credit Institutions.

2. The application file for a License of a foreign credit institution must be prepared in two sets, one in Vietnamese and one in a commonly used foreign language. The set in a commonly used foreign language must be prepared and certified abroad and legalized by consular authentication. Vietnamese copies and translations from a foreign language into Vietnamese must be certified by a Vietnamese notary public.

Article 12. The duration of operation of foreign credit institutions in Vietnam is specified in the License, specifically as follows:

1. Branches of foreign banks: not exceeding twenty years;

2. Joint venture banks, joint venture finance companies, and finance companies with 100% foreign capital: not exceeding thirty years;

3. Joint venture financial leasing companies, financial leasing companies with 100% foreign capital: not exceeding fifty years;

4. Representative offices of foreign credit institutions: not exceeding five years.

Article 13.

1. Foreign credit institutions wishing to extend their operations in Vietnam may be reviewed by the State Bank on a case-by-case basis; each extension period shall not exceed the duration specified in the previous License.

2. When foreign credit institutions need to extend their operations, they must submit an application and extension file before the expiration date specified in the License: at least 180 days for foreign credit institutions specified in Clause 1, Article 2 of this Decree and thirty days for the representative offices of foreign credit institutions.

Article 14.

1. The representative office of a foreign credit institution operating in Vietnam shall cease operations in the following cases:

a) Expiration of the term of operation stated in the License. The State Bank shall notify in writing the termination of the representative office's operations in Vietnam;

b) Voluntary termination of operations. In this case, at least sixty days before the expected date of termination of the representative office's operations, the foreign credit institution must submit a request to the State Bank;

c) Revocation of the License when one of the cases prescribed in points a, b, đ, Clause 1, Article 29 of the Law on Credit Institutions occurs, and when the foreign credit institution goes bankrupt;

d) If a foreign credit institution has been granted permission to operate according to Clause 1, Article 2 of this Decree and if it already has a representative office opened in the same locality (province, centrally governed city), then that representative office must terminate its operations;

2. Prior to terminating operations, the representative office of the foreign credit institution must fulfill all obligations and procedures as stipulated by law;

3. The representative office of the foreign credit institution must return the License and the Registration Certificate to the Vietnamese authorities that issued them no later than the date of termination of operations;

Article 15. When the foreign bank is dissolved or goes bankrupt, its branch operating in Vietnam must terminate its operations. Prior to terminating operations, the foreign bank must fulfill all obligations and complete all necessary procedures as stipulated by Vietnamese law and under the guidance of the State Bank;

Article 16. Within twelve months from the date of issuance of the License, the branch of the foreign bank, joint venture bank, joint venture non-bank financial organization, and wholly foreign-owned non-bank financial organization, and the representative office of the foreign credit institution must commence operations;

Article 17. At least thirty days prior to the commencement of operations, the foreign credit institution granted a License according to Clause 1, Article 2 of this Decree must complete the publication of notices in five consecutive central and local newspapers where the credit institution is headquartered. The content of the publication includes the main information recorded in the License, Business Registration Certificate, and the opening day of operations;

Article 18.

1. Foreign credit institutions operating in Vietnam and granted a License must pay a fee in US dollars. The amount of the fee for each issuance and renewal is specified as follows:

a) License for establishing a representative office of a foreign credit institution: 5,000 USD (five thousand US dollars);

b) License for establishing a branch of a foreign bank, and License for establishment and operation of a joint venture bank: 30,000 USD (thirty thousand US dollars);

c) License for establishment and operation of a joint venture non-bank financial organization and wholly foreign-owned non-bank financial organization: 10,000 USD (ten thousand US dollars);

d) License for establishing a branch of a joint venture bank: 5,000 USD (five thousand US dollars);

đ) License for establishing a branch of a non-bank financial organization: 5,000 USD (five thousand US dollars);

e) License for establishing a representative office of a non-bank financial organization: 3,000 USD (three thousand US dollars);

2. The procedure for paying the fee for issuing the License shall be carried out in accordance with the guidelines of the State Bank;

Article 19. Foreign credit institutions operating in Vietnam may import equipment directly serving their operations in accordance with the provisions of the law;

Article 20.

1. A foreign bank may establish a branch in provinces and centrally governed cities but may not establish a sub-branch of that branch. Where a branch has been established, the foreign bank may not set up a representative office. A foreign bank branch may not open any transaction points other than at its own headquarters;

2. A joint venture bank may establish a head office and branches in provinces and centrally governed cities in accordance with Articles 32 and 33 of the Law on Credit Institutions;

3. Non-bank financial organizations may establish branches and representative offices in provinces and centrally governed cities in accordance with Articles 32 and 33 of the Law on Credit Institutions;

4. The application procedures for establishing a head office, branch, and representative office mentioned in Clauses 2 and 3 of this Article shall be carried out in accordance with the regulations of the State Bank;

Article 21. The management, administration, supervision, and internal audit of foreign credit institutions operating in Vietnam shall be conducted in accordance with Sections 3 and 4, Chapter II of the Law on Credit Institutions;

Article 22.

1. Each branch of a foreign bank must have its own General Director (Director) to manage daily operations;

2. The General Director (Director) of a foreign bank branch is appointed and relieved by the competent authority of the foreign bank and must be approved by the Governor of the State Bank;

Article 23.

1. The governing body of a joint venture bank and a joint venture non-bank financial organization is the Board of Directors. The Board of Directors consists of the Chairman, Vice-Chairman, and members. The number of Board of Directors members in a joint venture financial organization depends on the capital contribution of each foreign party and the Vietnamese party in the joint venture financial organization. In the case where each party participating in the joint venture has a financial organization, each party must have at least two members participating in the Board of Directors. In the case where multiple financial organizations participate in the joint venture, each financial organization must have at least one member participating in the Board of Directors;

2. The term of the Board of Directors of a joint venture bank and a joint venture non-bank financial organization is agreed upon by the parties involved, but shall not exceed five years;

3. The General Director or First Deputy General Director of a joint venture bank and a joint venture non-bank financial organization must be a representative of the Vietnamese party;

4. The duties and powers of the Chairman of the Board of Directors, the General Director, and the First Deputy General Director are recorded in the charter of the joint venture bank and the joint venture non-bank financial organization;

Article 24.

1. The General Director of a wholly foreign-owned non-bank financial organization represents the organization and is responsible for all activities of the organization under Vietnamese law.

2. The duties and powers of the General Director are recorded in the charter of the foreign-owned non-bank financial institution with 100% foreign capital.

Article 25.

1. A foreign financial institution may establish representative offices in certain provinces and centrally-administered cities of Vietnam, and may only establish one representative office in each province or city.

2. Each representative office of a foreign financial institution in Vietnam must have its own head of representative office.

Article 26.

1. The ratio of the subscribed capital contribution of the Foreign Party and the Vietnamese Party in a joint venture bank shall be agreed upon by the Parties and approved by the State Bank when issuing the License. For joint venture banks conducting commercial banking operations, the foreign party's capital contribution shall not exceed 50% of the subscribed capital of the joint venture bank.

2. The capital contribution of the Foreign Party in a joint venture non-bank financial institution shall not be less than 30% of the subscribed capital.

3. In cases where the subscribed capital includes contributions in kind, the joint venture bank and the joint venture non-bank financial institution must present to the State Bank legal documents proving ownership and value of the contributed assets. The value of the contribution in kind is determined based on the market price at the time of contribution and must be certified by an independent appraisal organization.

Article 27.

1. The Vietnamese Party and the Foreign Party in a joint venture financial institution have the right to transfer their capital contributions but must comply with the provisions of Article 26 of this Decree and must prioritize transferring to the other Parties within the joint venture financial institution. In case of transferring to an entity outside the joint venture, the conditions for such transfer shall not be more favorable than those for transferring to the Parties within the joint venture financial institution. The transfer of capital must be agreed upon by the Parties within the joint venture financial institution.

2. A foreign-owned non-bank financial institution with 100% foreign capital has the right to transfer its capital but must prioritize transferring to Vietnamese organizations.

3. The ratio and conditions for transferring capital of joint venture banks and joint venture non-bank financial institutions must be specifically stipulated in the charter of the financial institution in accordance with the provisions of the law. In cases where the transferred subscribed capital exceeds the prescribed limit, the capital transfer shall only take effect after being approved by the State Bank.

4. In cases where profit arises from the transfer of capital, the transferring party must pay taxes according to the provisions of Vietnamese law.

Article 28. The Parties participating in a joint venture bank or joint venture non-bank financial institution share profits and bear risks of the joint venture financial institution in proportion to their respective capital contributions, except in cases where the Parties have agreed otherwise as stipulated in the joint venture contract.

Article 29. The subscribed capital or authorized capital of foreign financial institutions operating in Vietnam must be fully reflected on the balance sheet of the financial institution.

Chapter 3:

CONTENT OF OPERATIONS

Article 30. A branch of a foreign bank may carry out some or all of the following activities:

1. Accepting term and non-term deposits in accordance with the regulations of the State Bank; shall not accept savings deposits under any form;

2. Issuing deposit certificates, securities;

3. Borrowing from domestic and foreign credit institutions;

4. Short-term borrowing from the State Bank;

5. Providing short-term, medium-term, and long-term loans;

6. Discounting, rediscounting, pledging bills and securities;

7. Bank guarantees;

8. Foreign exchange trading;

9. Performing payment services and cash management services;

10. Opening deposit accounts at foreign credit institutions in accordance with the regulations of the State Bank;

11. Acting as agent for credit card payments;

12. Performing collection and payment services;

13. Performing entrusted services and asset management;

14. Performing financial and monetary advisory services.

Article 31. A joint venture bank may carry out some or all of the following activities:

1. Accepting term and non-term deposits;

2. Issuing deposit certificates, securities;

3. Borrowing from domestic and foreign credit institutions;

4. Short-term borrowing from the State Bank;

5. Providing short-term, medium-term, and long-term loans;

6. Discounting, rediscounting, pledging bills and securities;

7. Bank guarantees;

8. Foreign exchange trading;

9. Performing payment services and cash management services;

10. Opening deposit accounts at foreign credit institutions in accordance with the regulations of the State Bank;

11. Acting as agent for credit card payments;

12. Performing collection and payment services;

13. Performing entrusted services and asset management;

14. Performing financial and monetary advisory services.

Article 32. A joint venture leasing company, a wholly foreign-owned leasing company may carry out some or all of the following activities:

1. Accepting term deposits of one year or longer, shall not accept non-term deposits or savings deposits;

2. Issuing bonds, securities;

3. Borrowing from domestic and foreign credit institutions;

4. Leasing finance;

5. Bank guarantees;

6. Performing advisory services and related services to leasing finance activities;

7. Performing entrusted services and asset management.

Article 33. A joint venture financial company, a wholly foreign-owned financial company may carry out some or all of the following activities:

1. Accepting term deposits of one year or longer, shall not accept non-term deposits or savings deposits;

2. Issuing bonds, securities with terms of one year or longer;

3. Borrowing from domestic and foreign credit institutions;

4. Providing short-term, medium-term, and long-term loans;

5. Discounting, rediscounting, pledging bills and securities;

6. Bank guarantees;

7. Foreign exchange trading;

8. Performing entrusted services and asset management;

9. Performing financial and monetary advisory services.

Article 34The representative office of a foreign financial institution may carry out all or part of the following activities as recorded in the License issued by the State Bank:

1. Serving as a liaison office;

2. Market research;

3. Promoting the establishment of investment projects by the foreign financial institution in Vietnam;

4. Promoting and monitoring the implementation of contracts and agreements signed between the foreign financial institution and Vietnamese financial institutions and enterprises, and projects financed by the foreign financial institution in Vietnam;

5. Other activities in compliance with Vietnamese law, as permitted by the State Bank.

Article 35. When there is a need and with the approval of the State Bank, branches of foreign banks, joint venture banks, and non-bank financial institutions may carry out other activities in compliance with relevant Vietnamese laws.

Article 36.

1. In the Licence issued to the branch of a foreign bank, a joint venture bank, or a non-bank financial institution, the State Bank of Vietnam shall specify in detail the permitted business activities to be conducted in Vietnam in accordance with the type and scale of the licensed credit institution.

2. Any amendments or supplements to the Licence issued to a foreign credit institution operating in Vietnam shall be carried out by the State Bank of Vietnam.

Article 37. During their operations in Vietnam, foreign credit institutions must comply with the restrictions stipulated in Section 5, Chapter III of the Law on Credit Institutions to ensure safety in their operations.

Article 38.

1. The branch of a foreign bank, a joint venture bank, or a non-bank financial institution operating in Vietnam shall maintain accounting records in accordance with the accounting chart of accounts prescribed by the State Bank of Vietnam and use vouchers, prepare accounting reports, and financial statements in compliance with the regulations of the State Bank of Vietnam.

2. The currency unit for accounting purposes shall be the Vietnamese dong. If a foreign credit institution operating in Vietnam requires to maintain its accounts in a foreign currency for reporting purposes to its head office, it must obtain approval from the State Bank of Vietnam.

Chapter 4:

IMPLEMENTING PROVISIONS

Article 39. This Decree shall take effect fifteen days from the date of signature and shall supersede any previous documents that conflict with this Decree.

Article 40. Branches of foreign banks, dependent branches of foreign banks, joint venture banks, non-bank financial institutions, and representative offices of foreign credit institutions currently operating in Vietnam shall adjust their organization and operations in accordance with this Decree and the regulations of the State Bank of Vietnam.

Article 41. The Governor of the State Bank of Vietnam is responsible for guiding the implementation of this Decree.