Decision No. 20/2008/QĐ-NHNN On Amending and Supplementing Certain Provisions of the Regulations on Shareholders, Shares, Stocks, and Registered Capital of Joint Stock Commercial Banks of the State and People Issued Pursuant to Decision No. 122/2001/QĐ-NHNN dated September 4, 2001 of the Governor of the State Bank of Vietnam

Pursuant to …;

Regarding amendments and supplements to certain provisions on shareholders, shares, stocks, and charter capital of state-owned and people's joint-stock commercial banks

issued pursuant to Decision No. 1122/2001/QĐ-NHNN dated September 4, 2001 of the Governor of the State Bank of VietnamPursuant to the Law on the State Bank of Vietnam 1997; the Law Amending and Supplementing Certain Provisions of the Law on the State Bank of Vietnam 2003;

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 GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on Credit Organizations 1997; the Law Amending and Supplementing Certain Provisions of the Law on Credit Organizations 2004;

Pursuant to Decree No. 49/2000/NĐ-CP dated September 12, 2000 of the Government on the organization and operation of commercial banks;

Pursuant to the Enterprise Law 2005;

Pursuant to Decree No. 52/2003/ND-CP dated May 19, 2003, issued by the Government, detailing the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of the Department of Banks and Non-Bank Credit Institutions,

Amending and supplementing certain provisions of the Regulations on shareholders, shares, stocks, and charter capital of state-owned and people's joint-stock commercial banks issued pursuant to Decision No. 1122/2001/QĐ-NHNN dated September 4, 2001 of the Governor of the State Bank of Vietnam as follows:

Pursuant to …;

Article 1. 1. Clause 2 of Article 25 is amended as follows:

"2. The application for approval to change the level of charter capital shall include the following documents:

a) A letter from the Chairman of the Board of Directors (stating the reasons and necessity);
b) Minutes of the General Meeting of Shareholders regarding the change in the level of charter capital;
c) A plan to change the level of charter capital approved by the General Meeting of Shareholders, which must include at least the following contents:
(i) The need to decide to change the level of charter capital (clearly stating the use of capital for each corresponding need).

(ii) An assessment of the expected business performance after changing the level of charter capital: including the following expected indicators after changing the level of charter capital: absolute and percentage growth in total assets, credit, customer deposits, and deposits and loans from other credit institutions; safety ratios in bank operations; pre-tax return on equity (ROE), pre-tax return on total assets (ROA).

(iii) An evaluation of the management, operation, and internal control capabilities of the Board of Directors, Management Board, and internal control system with respect to the scale of capital and operations after changing the level of charter capital.

(iv) The plan to change the level of charter capital during the fiscal year must include at least the following contents:

- The total level of charter capital expected to be changed;

- The anticipated issuance periods within the year;

- The issuance plan for each period: types of entities eligible to purchase, offering price for each type of entity (if not yet determined, it should be noted as undetermined, however, the offering price for shares must comply with the provisions of the Enterprise Law), sale date, and other related conditions concerning the rights and obligations of each type of entity if applicable;

- The anticipated changes in ownership structure of shareholders holding 5% or more of the charter capital of the joint-stock commercial bank after each change in the level of charter capital and the reason for such change;

d) A report listing current shareholders holding 5% or more of the charter capital of the joint-stock commercial bank and the anticipated changes in these shareholders after each change in the level of charter capital, including the following contents: shareholder name, address, quantity of each type of share, total number of shares, ratio compared to the total charter capital of the bank.
đ) A summary report on the proposed changes to the composition of the Board of Directors and Supervisory Board after changing the level of charter capital, including a brief description of the qualifications and banking experience of each member.
e) Documents of shareholders participating in purchasing shares to increase the charter capital:
(i) For organizations (other than credit institutions) currently or expected to hold 5% or more of the charter capital and shareholders who are credit institutions:

- An application for purchasing shares signed by the legal representative (Annex 1);

- Financial statements for the most recent year preceding the purchase of shares.

For foreign organizations, financial statements must comply with the provisions of Circular No. 07/2007/TT-NHNN dated November 29, 2007 of the State Bank of Vietnam guiding the implementation of certain provisions of Decree No. 69/2007/NĐ-CP dated April 20, 2007 of the Government on foreign investors purchasing shares of Vietnamese commercial banks.

For domestic organizations, financial statements must meet the following requirements:

+ Comply with the current accounting regulations of the State;

+ Financial statements must include: balance sheet, income statement, cash flow statement, and notes to the financial statements;

+ In case the shareholder is a parent company, the shareholder must submit consolidated financial statements according to the accounting laws along with the financial statements of the parent company.

+ Annual financial statements must be audited by an independent auditing organization listed by the Ministry of Finance as meeting the criteria for auditing enterprises. The audit opinion on the financial statements must reflect full acceptance. In case the audit opinion is qualified acceptance, the exception must be immaterial and there must be reasonable documentation explaining the basis for the exception;

+ In case the application is submitted before March 1st each year, the annual financial statement in the initial application may be unaudited, but must include the audited financial statement of the previous year and must be supplemented immediately upon receipt of the audited financial statement of the year immediately preceding the year of share purchase;

+ In case the end date of the latest financial statement is more than ninety days prior to the submission date of the application for approval to change the level of charter capital to the State Bank of Vietnam, the shareholder must prepare a supplementary financial statement up to the nearest month or quarter; + In case there are unusual changes after the end date of the latest financial statement, the shareholder must prepare a supplementary financial statement up to the nearest month or quarter;

In the case where the date of the end of the accounting period of the most recent financial report is more than ninety days prior to the date of submission of the application for approval of a change in the valid registered capital to the State Bank, shareholders must prepare a supplementary financial report up to the nearest month or quarter; In the case where there are unusual changes after the fiscal year-end of the most recent financial report, shareholders must prepare a supplementary financial report up to the nearest month or quarter;

+ If the financial report is a copy, it must be a certified copy by the competent state agency or auditing organization (in case the financial report has been audited) or a notarized copy by the shareholder (in case the financial report has not been audited). In the case where the shareholder does not have a financial report because they were newly established and operated from December 31 of the year prior to the change in charter capital to January 1 of the year of the change in charter capital, the shareholder must submit the following documents instead of the financial report as prescribed: A written report on the financial capacity of the controlling owner accompanied by relevant supporting documents; and a written commitment fully responsible under the law for the shareholder's financial capacity to contribute capital to the bank.

(ii) For individuals currently or expected to hold five percent or more of the charter capital:

- Application for purchase of shares by shareholders (Annex No. 2);

- Declaration of income and assets of individuals with a value of one hundred million dong or more according to the model prescribed by the State Bank (Annex No. 3)

(iii) For shareholders who are members of the Board of Directors, Supervisory Board, or Management Board of the bank;

Application for purchase of shares by shareholders who are members of the Board of Directors, Supervisory Board, or Management Board of the bank (Annex No. 2). In the case where the representative of the shareholder organization participates as a member of the Board of Directors or Supervisory Board of the bank, only the application for share purchase according to Annex No. 1 shall be made.

g) Other related documents as prescribed by law."

2. Clause 3 of Article 25 is amended as follows:

"3. Joint-stock commercial banks must prepare the dossier as prescribed in Clause 2 of this Article (two original copies) and send it to the State Bank Branch in the province or city where the head office of the joint-stock commercial bank is located. Within ten days from the date of receipt of the complete dossier of the joint-stock commercial bank, the State Bank Branch in the province or city shall be responsible for:
a) Examining the dossier in accordance with this Regulation.
b) Evaluating the plan to change the charter capital regarding: the effectiveness of the bank's operations after changing the charter capital, the management, operation, and control capability of the joint-stock commercial bank over the scale of capital and operations after changing the charter capital, the financial capacity of shareholders currently or expected to hold five percent or more of the charter capital and shareholders being credit organizations.
c) Checking the financial capacity of shareholders purchasing shares based on the following contents:

(i) For shareholders who are organizations: 

- For credit organizations: After purchasing shares of the joint-stock commercial bank, the credit organization must comply with the current regulations of the State Bank on the ratios ensuring safe operation of credit organizations; classification of debts, provision and use of risk reserves for credit.

- For other organizations that are not credit organizations currently or expected to hold five percent or more of the charter capital of the joint-stock commercial bank must ensure: Shareholders' equity minus long-term investments financed by shareholders' equity, short-term assets minus short-term debt remaining at least equal to the amount of capital invested in purchasing shares of the joint-stock commercial bank (specific determination method according to Annex No. 04 attached).

These indicators are determined based on the financial report of the organization mentioned in Point e (i) Clause 2 of this Article. 

(ii) For shareholders who are individuals currently or expected to hold five percent or more of the charter capital of the joint-stock commercial bank: Must prove their ability to contribute capital to the bank through the declaration of individual income and asset statement as prescribed in Clause 2 of Article e (ii) of this Article.

d) Propose specific opinions to the Governor of the State Bank for consideration, clearly stating the agreement or disagreement with the joint-stock commercial bank's change in charter capital. After receiving the opinion of the Governor of the State Bank, the State Bank Branch in the province or city will issue a document approving the joint-stock commercial bank's change in charter capital. In cases where approval is not given or not granted, the State Bank Branch in the province or city must issue a document clearly stating the reasons for the reply to the unit"

3. Supplement Article 39 as follows:

"Article 39: Responsibilities of related units under the State Bank:

1. Department of Banks:

a) Is the focal point for receiving applications for approval to change the charter capital of joint-stock commercial banks from the State Bank branch in the province or city where the head office of the joint-stock commercial bank is located, seeking opinions from the State Bank Inspectorate and the Department of Monetary Policy.

b) Within seven working days from the date of receipt of opinions from the State Bank Inspectorate and the Department of Monetary Policy, the Department of Banks will consolidate and propose to the leadership of the State Bank for consideration and issue written instructions on the change in charter capital of the joint-stock commercial bank.

2. State Bank Inspectorate: Within a maximum of seven working days from the date of receipt of the request from the Department of Banks (sent together with the dossier on the change in charter capital of the joint-stock commercial bank), the State Bank Inspectorate shall be responsible for:

a) Participating in writing, evaluating the activities of the joint-stock commercial bank under the CAMEL criteria; the results of classification in the year immediately preceding the year of the requested capital change; the results of classification in the year immediately preceding the year of the requested capital change; the results of on-site inspection and the classification of debts and provision of reserves, compliance with operational safety ratios at the latest time when requesting capital change.

b) The opinion of the Inspectorate clearly states whether to agree or disagree with the request to change the capital of the joint-stock commercial bank.

3. Monetary Policy Department: Within seven working days from the date of receipt of the request from the Banking Institutions Department (accompanied by the documentation for changing the charter capital of joint-stock commercial banks), the Monetary Policy Department shall participate in writing, assess the impact of the plan to change the charter capital on the credit growth rate of joint-stock commercial banks in accordance with the Government's policy; agree or disagree with the change in the charter capital of joint-stock commercial banks and send it back to the Banking Institutions Department.

Article 2. This Decision takes effect fifteen days after its publication in the Official Gazette.

Article 3. The Head of the Office, the Heads of the Banking Institutions Department and non-bank financial institutions, the Heads of units under the State Bank of Vietnam, the Governors of the State Bank of Vietnam branches in provinces and centrally governed cities where joint-stock commercial banks have their headquarters, the Chairmen of the Boards of Directors, the Heads of Supervisory Boards, and the General Managers (Directors) of joint-stock commercial banks are responsible for implementing this Decision./.