Decision No. 24/2003/QD-NHNN on the establishment and termination of operations of branches and representative offices of non-bank financial institutions

DECISION OF THE GOVERNOR OF THE STATE BANK OF VIETNAM

Issuing regulations on establishing and ceasing operations of branches and representative offices of non-bank financial organizations.

representative office of a non-bank financial institution

_____________

GOVERNOR OF THE STATE BANK OF VIETNAM

 

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 and the Law on Credit Organizations No. 02/1997/QH10 dated December 12, 1997;

Pursuant to Decree No. 86/2002/ND-CP dated November 5, 2002 of the Government stipulating the functions, tasks, powers, and organizational structure of Ministries and ministerial-level agencies;

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

Pursuant to the Government Decree No. 79/2002/NĐ-CP dated October 4, 2002 on the organization and operation of finance companies;

Issued herewith are the Regulations on Loan Classification, Provisioning, and Utilization for Credit Risk Management in Banking Activities of Credit Institutions.

 

DECISION:

 

Article 1. This Decision promulgates regulations on establishing and ceasing operations of branches and representative offices of non-bank financial organizations.

Article 2. This Decision takes effect fifteen days after the date of signature.

Article 3. The Director of the Office, Heads of Departments of Non-Bank Financial Institutions under the State Bank of Vietnam, Heads of Units under the State Bank of Vietnam, Governors of Provincial Branches of the State Bank of Vietnam, Chairmen of Management Councils and General Directors (Directors) of non-bank financial organizations shall be responsible for implementing this Decision.

 

REGULATIONS

 

ON ESTABLISHING AND CEASING OPERATIONS OF BRANCHES,

REPRESENTATIVE OFFICES OF NON-BANK FINANCIAL ORGANIZATIONS

(Issued together with Decision No. 24/2003/QĐ-NHNN dated January 7, 2003)

of the Governor of the State Bank)

PART I

GENERAL PROVISIONS

Article 1.

Article 1. These provisions apply to the establishment and cessation of operations of branches and representative offices within the country of non-bank financial organizations established and operating in Vietnam.

Article 2. For the establishment and cessation of operations of branches and representative offices outside the country of non-bank financial organizations mentioned in Clause 1 above, they shall be carried out according to specific guidelines issued by the State Bank of Vietnam.

Article 2.

In these provisions, the following terms are understood as follows:

Point 1. Non-bank financial organization: refers to leasing companies as defined in Decree No. 16/2001/NĐ-CP dated May 2, 2001 of the Government on the organization and operation of leasing companies, finance companies as defined in Decree No. 79/2002/NĐ-CP dated October 4, 2002 of the Government on the organization and operation of finance companies, and other non-bank financial organizations.

Point 2. Branch of a non-bank financial organization: is a subsidiary unit with its own seal, conducting activities consistent with the business content of the non-bank financial organization under its authorization.

Point 3. Representative office of a non-bank financial organization: is a subsidiary unit with its own seal, tasked with representing the non-bank financial organization under its authorization. A representative office may not conduct business operations.

Article 3.

Article 4. Non-bank financial organizations wishing to establish and cease operations of their branches and representative offices must obtain approval from the State Bank of Vietnam.

Article 5. After receiving written approval from the State Bank of Vietnam, the non-bank financial organization shall issue decisions:

Subparagraph a. To establish a branch in areas where there is a need for operations, including the location of the main office.

Subparagraph b. To establish a representative office in areas where there is a need for operations.

Subparagraph c. To cease operations of a branch or representative office when there is no longer a need for operations.

Chapter II

ESTABLISHING BRANCHES AND REPRESENTATIVE OFFICES

PART I: CONDITIONS FOR ESTABLISHING BRANCHES AND REPRESENTATIVE OFFICES

Article 4.

Non-bank financial organizations may establish branches and representative offices in accordance with Article 3 of these provisions if they meet the following conditions:

Point 1. Having at least two years of operational experience since the date of commencement of operations.

Point 2. Conducting profitable business operations over the last two years. The overdue loan ratio at the end of the previous quarter must be below 5%.

Point 3. Having a minimum charter capital equal to the statutory capital level prescribed for non-bank financial organizations in Decree No. 82/1998/NĐ-CP dated October 3, 1998 of the Government on the issuance of the list of statutory capital levels for credit organizations.

Point 4. The management and operation system and internal audit system operate effectively.

Point 5. Information systems meet management requirements.

Point 6. Not violating safety regulations in operations, including:

Subparagraph a. Situations where loans or leasing cannot be granted.

Subparagraph b. Limitations on credit provision.

Subparagraph c. Limits on lending, leasing, and guarantees.

Subparagraph d. Limits on equity investment and share purchases.

Subparagraph đ. Safety ratios.

Subparagraph e. Risk reserves.

Point 7. Not violating other legal regulations.

PART II: DOCUMENTS AND PROCEDURES FOR ESTABLISHING BRANCHES AND REPRESENTATIVE OFFICES

Article 5.

The documents for requesting the State Bank of Vietnam to approve the establishment of branches and representative offices of non-bank financial institutions include:

1. A document from the Chairman of the Board of Directors or the authorized person requesting the State Bank of Vietnam to approve the establishment of branches and representative offices of non-bank financial institutions, which must outline: necessity, name, location, content, scope of operations of the branch and representative office.

2. A power of attorney document from the Chairman of the Board of Directors (for cases involving delegation).

3. A resolution of the Board of Directors on the establishment of branches and representative offices.

4. A proposal for establishing branches and representative offices, which clearly states necessity, operational needs, market research in the area; organizational structure, content, and scope of operations; plans for activities in the first three years.

5. Financial reports of the non-bank financial institution for the two most recent years accompanied by an audit report from an independent auditing organization. These documents must be originals; in case of copies, they must be certified by the issuing authority or notarized by a Notary Public.

6. A document from the People's Committee of the province or city where the non-bank financial institution intends to establish its branch or representative office, allowing the non-bank financial institution to set up its branch or representative office in that area.

In cases where the People's Committee of the province or city does not provide comments or only provides comments after the State Bank of Vietnam has issued an approval document for the establishment of branches and representative offices, the non-bank financial institution must clearly state this in the document from the Chairman of the Board of Directors for the State Bank of Vietnam to consider.

7. A document from the Governor of the State Bank of Vietnam branch in the province or city where the non-bank financial institution intends to establish its branch or representative office regarding the necessity and operating area of the branch and representative office of the non-bank financial institution, except when a publicly listed non-bank financial institution establishes a branch or representative office with its headquarters located in the same province or city as the main office.

8. A document confirming legal ownership or lawful right to use the premises of the branch and representative office.

Article 6.

Procedures and formalities for requesting the State Bank of Vietnam to approve the establishment of branches and representative offices of non-bank financial institutions:

1. Publicly listed non-bank financial institutions send two sets of documents for establishing branches and representative offices to the State Bank of Vietnam branch in the province or city where their main office is located.

Within a maximum period of 15 working days from the date of receipt of all documents, the State Bank of Vietnam branch in the province or city will review and provide comments in writing on the conditions and documents for establishing branches and representative offices according to Articles 4 and 5 of these Regulations, and forward them along with one set of documents of the publicly listed non-bank financial institution to the State Bank of Vietnam (Department of Banks and Non-Bank Financial Institutions).

2. State-owned non-bank financial institutions, non-bank financial institutions directly under financial institutions, joint venture non-bank financial institutions, and wholly foreign-owned non-bank financial institutions send two sets of documents for establishing branches and representative offices to the State Bank of Vietnam (Department of Banks and Non-Bank Financial Institutions).

Within a maximum period of 30 working days from the date of receipt of all documents of state-owned non-bank financial institutions, non-bank financial institutions directly under financial institutions, joint venture non-bank financial institutions, and wholly foreign-owned non-bank financial institutions, and within 15 working days from the date of receipt of documents of publicly listed non-bank financial institutions forwarded by the State Bank of Vietnam branch in the province or city, the State Bank of Vietnam will review and provide comments in writing on whether to approve or not approve the establishment of branches and representative offices of the submitting organizations. If not approved, the State Bank of Vietnam will issue a document stating the reasons.

Article 7.

1. Within six months from the date the State Bank of Vietnam issues an approval document, the non-bank financial institution must issue a decision to establish branches and representative offices and complete all necessary procedures according to the law to commence operations of the branches and representative offices.

2. Before the branches and representative offices start operations, the non-bank financial institution must register with the business registration authority and publish in central and local newspapers as required by law.

3. The non-bank financial institution must submit to the State Bank of Vietnam the decision to establish branches and representative offices, the registration document from the business registration authority, and other related documents.

Chapter III

TERMINATION OF OPERATIONS OF BRANCHES,

REPRESENTATIVE OFFICES

Article 8.

Non-bank financial institutions may terminate the operations of branches and representative offices after obtaining written approval from the State Bank of Vietnam.

Article 9.

The documents for requesting the State Bank of Vietnam to approve the termination of operations of branches and representative offices of non-bank financial institutions include:

1. A document from the Chairman of the Board of Directors or the authorized person regarding the termination of operations of branches and representative offices, which must clearly state the reasons, name, and address of the branches and representative offices seeking to terminate operations.

2. A power of attorney document from the Chairman of the Board of Directors (for cases involving delegation).

3. A resolution of the Board of Directors on the termination of operations of branches and representative offices.

4. A plan for handling the termination of operations of branches and representative offices.

5. A document from the Governor of the State Bank of Vietnam branch in the province or city where the branch or representative office intends to terminate operations regarding the termination of operations of the branch and representative office of the non-bank financial institution, except when a publicly listed non-bank financial institution terminates the operations of a branch or representative office with its headquarters located in the same province or city as the main office.

Article 10.

The procedures and formalities for requesting the State Bank of Vietnam to approve the termination of operations of branches and representative offices of non-bank financial institutions are as follows:

1. A shareholding non-bank credit organization shall submit two sets of documents to terminate the operations of its branch or representative office to the State Bank Branch in the province or city where such organization has its main office.

Within a maximum period of fifteen working days from the date of receipt of complete documents, the State Bank Branch in the province or city shall examine and issue a written opinion on the request to terminate the operations of the branch or representative office of the submitting organization in accordance with Article 9 of this Regulation and send it to the State Bank (Department of Banks and Non-Bank Credit Organizations), along with one set of documents of the shareholding non-bank credit organization.

2. A state-owned non-bank credit organization, a non-bank credit organization under a bank, a joint venture non-bank credit organization, and a wholly foreign-owned non-bank credit organization shall submit two sets of documents to terminate the operations of their branches or representative offices to the State Bank (Department of Banks and Non-Bank Credit Organizations).

3. Within a maximum period of thirty working days from the date of receipt of complete documents of the non-bank credit organizations as stipulated in Clause 2 of this Article and fifteen working days from the date of receipt of documents of the shareholding non-bank credit organization sent by the State Bank Branch in the province or city, the State Bank shall examine and issue a written approval or disapproval for terminating the operations of the branch or representative office of the submitting organization. In case of disapproval, the State Bank shall issue a document specifying the reasons.

Article 11.

1. Within thirty working days from the date of receipt of the State Bank's approval document, the non-bank credit organization must issue a decision and terminate the operations of its branch or representative office.

2. The decision to terminate operations must include the following main contents:

a) The name and address of the branch or representative office being terminated;

b) The reason for terminating the operations of the branch or representative office;

d) The responsibility of the commercial bank towards creditors.

d) The responsibility of the non-bank credit organization towards creditors.

3. The decision to terminate the operations of the branch or representative office of the non-bank credit organization must be sent to the State Bank, business registration authority, creditors, interested parties; publicly posted at the main office of the non-bank credit organization and the branch or representative office being terminated; published in central and local newspapers in accordance with the law.

Article 12.

A non-bank credit organization with a branch or representative office that has ceased operations is responsible for settling all debts owed to creditors and resolving other related issues in accordance with the law.

Chapter V

IMPLEMENTING PROVISIONS

Article 13.

Any amendments or supplements to the provisions of this Regulation shall be decided by the Governor of the State Bank./.