Circular No. 25/2024/TT-NHNN stipulates the conditions, documents, procedures, and formalities for approving the contribution of capital and purchase of shares by credit institutions.

CIRCULAR

Regulations on conditions, documents, procedures, and formalities for approval

the contribution of capital and purchase of shares by credit institutions

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

Pursuant to the Law on Credit Institutions dated January 18, 2024;

Pursuant to Decree No. 102/2022/NĐ-CP dated December 12, 2022 of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of Banking Inspection and Supervision;

The Governor of the State Bank of Vietnam issues this Circular to stipulate the conditions, documents, procedures, and formalities for approving the contribution of capital and purchase of shares by credit institutions.

PART I
GENERAL PROVISIONS

Article 1. Scope of Regulation

1. This Circular stipulates the conditions, documents, procedures, and formalities for approving the contribution of capital and purchase of shares by credit institutions, including:

a) Commercial banks contributing capital and purchasing shares to:

(i) Establishing, acquiring subsidiaries or associated companies operating in the fields of securities issuance guarantee, securities brokerage; management and distribution of investment fund certificates; stock portfolio management and stock trading; insurance; debt management and asset exploitation; remittances; gold; payment intermediary services; credit information;

(ii) Acquire subsidiaries and associated companies operating in the fields of financial leasing; factoring; consumer credit; issuing credit cards;

b) Commercial banks contributing capital or purchasing shares in domestic enterprises operating outside the fields of insurance, securities, remittances, gold, factoring, credit card issuance, consumer credit, payment intermediary services, and credit information;

c) Comprehensive financial companies contributing capital or purchasing shares to establish or acquire subsidiaries or associated companies operating in the fields of insurance, securities, and debt management and asset exploitation; specialized financial companies contributing capital or purchasing shares to establish or acquire subsidiaries or associated companies operating in the field of debt management and asset exploitation;

d) Converting debts into contributed capital or share capital to handle non-performing loans of commercial banks at domestic enterprises operating outside the fields of insurance, securities, remittances, gold, factoring, credit card issuance, consumer credit, payment intermediary services, and credit information.

2. This Circular does not apply to the following cases:

a) Commercial banks contributing capital and purchasing shares to establish credit institutions;

b) Commercial banks purchasing and holding shares of other credit institutions;

c) Contributing capital and purchasing shares from the transferee in compulsory transfer of commercial banks.

3. Increasing capital at subsidiaries and associated companies of credit institutions in the cases specified in points a and c, Clause 1 of this Article must comply with the conditions stipulated in Article 8 of this Circular.

Article 2. Applicability

This Circular applies to:

1. Commercial banks, comprehensive financial companies, and specialized financial companies (hereinafter referred to collectively as credit institutions).

2. Organizations and individuals related to the contribution of capital, purchase of shares, conversion of debts into contributed capital and share capital of credit institutions.

Article 3. Principles for preparing documents

1. Documents must be prepared in Vietnamese. In cases where documents are issued, notarized, or certified by competent authorities of foreign countries, they must be legalized according to Vietnamese law (except in cases exempted from legalization under Vietnamese law regarding legalization) and translated into Vietnamese.

2. Translations from foreign languages into Vietnamese must be notarized or authenticated with the signature of the translator in accordance with Vietnamese law.

3. Submitted documents must be original copies or certified copies issued from the original books or copies with authentication; in cases where credit institutions submit certified copies along with the original for comparison, the person conducting the comparison must sign and bear responsibility for the accuracy of the copy compared to the original.

4. Documents of credit institutions requesting the State Bank of Vietnam (hereinafter referred to as the State Bank) to approve must be signed by the legal representative or authorized representative (hereinafter referred to as the lawful representative). In cases of signing by authorization, the documents must include an authorization letter established in accordance with the provisions of the law.

Article 4. Competence to Approve Capital Contribution and Share Purchase by Credit Institutions

1. The Governor of the State Bank examines and approves contributions of capital and purchases of shares in domestic enterprises operating in the fields specified in point b, Clause 1, Article 1 of this Circular and the conversion of debts into contributed capital or share capital as specified in point d, Clause 1, Article 1 of this Circular.

2. The Director of Banking Inspection and Supervision examines and approves contributions of capital and purchases of shares to establish or acquire subsidiaries or associated companies as specified in points a and c, Clause 1, Article 1 of this Circular.

Chapter II
CONDITIONS, DOCUMENTS, PROCEDURES AND FORMALITIES FOR APPROVAL

MATTERS RELATING TO CAPITAL CONTRIBUTION AND PURCHASE OF SHARES; CONDITIONS FOR CAPITAL INCREASE AT SUBSIDIARIES AND AFFILIATED COMPANIES OF CREDIT ORGANIZATIONS

REGARDING SUBSIDIARIES AND AFFILIATED COMPANIES OF CREDIT ORGANIZATIONS

Article 5. Conditions for Implementing Capital Contribution and Share Purchase by Credit Institutions

1. Conditions for contributing capital, purchasing shares to establish, or acquire a subsidiary company as stipulated at point a, c Clause 1 Article 1 of this Circular (excluding subsidiaries operating in the management of debts and exploitation of assets):

a) A license for establishment and operation of credit institutions containing the content of capital contribution and share purchase;

b) Ensuring the minimum capital safety ratio as prescribed at point b Clause 1 Article 138 of the Law on Credit Institutions in the 24 months immediately preceding the month of application and at the time of completion of capital contribution, share purchase;

c) Ensuring compliance with the limits on capital contribution and share purchase as prescribed in Article 137 of the Law on Credit Organizations in the 24 months immediately preceding the month of application and at the time of completion of capital contribution and share purchase;

d) The actual value of the registered capital at the time of application and at the time of completion of capital contribution, share purchase shall not be lower than the statutory capital;

đ) Profitable business results according to the financial statements of the year immediately preceding the application year, audited by an independent auditing organization;

e) Not being subject to administrative penalties for classification of debts, provision for risk management, capital contribution, and share purchase in the 12 months immediately preceding the month of application;

g) Having a non-performing loan ratio as defined by the Governor of the State Bank regarding asset classification in the operations of credit institutions and foreign bank branches less than 3% in the 12 months immediately preceding the month of application;

h) Ensuring organizational management structure; the number of members, structure, term of office of the Board of Directors, Board of Members, Supervisory Board, General Director (Director) comply with the provisions of the Law on Credit Institutions at the time of application.

2. Conditions for contributing capital, purchasing shares to establish, or acquire an associated company as stipulated at point a, c Clause 1 Article 1 of this Circular (excluding associated companies operating in the management of debts and exploitation of assets):

a) The conditions prescribed at points a, d, đ, e, g, h Clause 1 of this Article;

b) Ensuring the minimum capital safety ratio as prescribed at point b Clause 1 Article 138 of the Law on Credit Institutions in the 12 months immediately preceding the month of application and at the time of completion of capital contribution, share purchase;

c) Ensuring compliance with the limits on capital contribution and share purchase as prescribed in Article 137 of the Law on Credit Organizations in the 12 months immediately preceding the month of application and at the time of completion of capital contribution and share purchase.

3. Conditions for implementing capital contribution and share purchase to establish, acquire subsidiaries and associated companies operating in asset management and exploitation fields:

a) The conditions prescribed at points a, d Clause 1 of this Article;

b) Ensuring compliance with the limits on capital contribution and share purchase as prescribed in Article 137 of the Law on Credit Organizations at the time of application and at the time of completion of capital contribution and share purchase;

c) Ensuring the minimum capital adequacy ratio as prescribed in point b, Clause 1, Article 138 of the Law on Credit Organizations at the time of application and at the time of completion of capital contribution and share purchase.

4. Conditions for contributing capital, purchasing shares for other enterprises operating in the fields prescribed at point b Clause 1 Article 1 of this Circular:

a) The conditions prescribed in Clause 1 of this Article;

b) Ensuring the maximum ratio of short-term capital used for medium- and long-term loans as prescribed by the Governor of the State Bank regarding limits and ratios for ensuring safety in banking operations, including foreign bank branches in the 24 months immediately preceding the month of application and at the time of completion of capital contribution, share purchase.

5. Conditions for implementing the conversion of debt into capital contribution and share purchase as specified in point d, Clause 1, Article 1 of this Circular:

a) The conditions prescribed at points a, b, c, d, đ, e, h Clause 1 of this Article;

b) The debt converted into capital contribution or share purchase must be a non-performing debt, and the conversion of debt into capital contribution or share purchase is for the purpose of resolving non-performing debt. Non-performing debt is debt determined according to the Governor of the State Bank's regulations on asset classification in the operations of credit institutions and foreign bank branches.

Article 6. Documents for requesting approval of capital contribution and share purchase by credit organizations

1. Documents for requesting approval for contributing capital, purchasing shares to establish, or acquire a subsidiary, associated company as stipulated at point a, c Clause 1 Article 1 of this Circular (excluding subsidiaries, associated companies operating in the management of debts and exploitation of assets) include:

a) A document from the credit organization proposing approval of the capital contribution and share purchase as stipulated in the Appendix attached to this Circular;

b) A document from the competent authority of the credit organization approving the plan for capital contribution and share purchase;

c) The proposal of the credit institution on capital contribution, share purchase, which must minimally include the following contents:

(i) Name (in Vietnamese and foreign language), main office address of the credit organization contributing capital and purchasing shares;

(ii) Name (in Vietnamese and foreign language), main office address, business content, duration of operation of the enterprise receiving capital contribution, share purchase;

(iii) Reason and necessity for the capital contribution and share purchase;

(iv) Estimated amount of capital contribution, proportion of contributed capital; estimated number of shares and proportion of share ownership at the enterprise receiving capital contribution and share purchase;

(v) Registered capital, actual value of registered capital of the credit organization before implementing the capital contribution and share purchase;

(vi) Estimated registered capital, actual value of registered capital of the credit organization after completing the capital contribution and share purchase;

(vii) Non-performing loan ratio each month in the 12 months immediately preceding the month of application;

(viii) Situation regarding compliance with regulations on classification of debts, provision for risk management, capital contribution, and share purchase in the 12 months immediately preceding the month of application;

(ix) Minimum capital safety ratio in the 12 months immediately preceding (for the case of capital contribution, share purchase to establish, acquire an associated company) or 24 months immediately preceding (for the case of capital contribution, share purchase to establish, acquire a subsidiary) before the month of application and at the time of completion of capital contribution, share purchase;

(x) Information on compliance with the limit on capital contribution, share purchase as prescribed in Article 137 of the Law on Credit Institutions in the 12 months immediately preceding (for the case of capital contribution, share purchase to establish, acquire an associated company) or 24 months immediately preceding (for the case of capital contribution, share purchase to establish, acquire a subsidiary) before the month of application and at the time of completion of capital contribution, share purchase;

(xi) Management structure of the credit institution; the number of members, structure, term of office of the Board of Directors, Board of Members, Supervisory Board, General Director (Director) in accordance with the Law on Credit Institutions at the time of application;

(xii) Significant shareholders and related parties of significant shareholders of the subsidiary, associated company after establishment, acquisition by the credit institution as prescribed by the Law on Credit Institutions and the State Bank;

(xiii) Assessment of the impact of capital contribution and share purchase on the financial situation, governance, management, and operations of the credit organization;

d) Financial statements of the year immediately preceding the application year of the credit institution, audited by an independent auditing organization;

đ) Copy of the Business Registration Certificate of the enterprise receiving capital contribution, share purchase.

2. The documents for requesting approval of capital contribution and share purchase to establish, acquire subsidiaries and associated companies operating in the field of debt management and asset exploitation shall include:

a) The components of documents prescribed at points a, b, đ Clause 1 of this Article;

b) The proposal of the credit institution on capital contribution, share purchase, which must minimally include the contents prescribed at points c(i), c(ii), c(iii), c(iv), c(v), c(vi) Clause 1 of this Article and information on the minimum capital safety ratio, compliance with the limit on capital contribution, share purchase as prescribed in Article 137 of the Law on Credit Institutions at the time of application and at the time of completion of capital contribution, share purchase.

3. Documents for requesting approval for contributing capital, purchasing shares for other enterprises operating in the fields prescribed at point b Clause 1 Article 1 of this Circular include:

a) The components of documents prescribed at points a, b, d, đ Clause 1 of this Article;

b) The proposal of the credit institution on capital contribution, share purchase, which must minimally include the contents prescribed at points c(i), c(ii), c(iii), c(iv), c(v), c(vi), c(vii), c(viii), c(xi), c(xii), c(xiii) Clause 1 of this Article and the following contents:

(i) Minimum capital safety ratio in the 24 months immediately preceding the month of application and at the time of completion of capital contribution, share purchase;

(ii) Information on compliance with the limit on capital contribution, share purchase as prescribed in Article 137 of the Law on Credit Institutions in the 24 months immediately preceding the month of application and at the time of completion of capital contribution, share purchase;

(iii) Maximum ratio of short-term capital used for medium- and long-term loans in the 24 months immediately preceding the month of application and at the time of completion of the capital contribution and share purchase.

4. The documents for requesting approval of converting debt into capital contribution and share purchase as specified in point d, Clause 1 of Article 1 of this Circular shall include:

a) The components of documents as specified in point a, b, and d, Clause 1 of this Article;

b) A copy of the Business Registration Certificate of the enterprise whose debt is to be converted into capital contribution or share capital.

c) The project of the credit institution on contributing capital or purchasing shares, which must minimally include the contents specified in points c(i), c(ii), c(iii), c(iv), c(v), c(vi), c(viii), c(xi), c(xii), c(xiii) of Clause 1 of this Article and the following information:

(i) Minimum capital safety ratio in the 24 months immediately preceding the month of application and at the time of completion of capital contribution, share purchase;

(ii) Information on compliance with the limit on capital contribution, share purchase as prescribed in Article 137 of the Law on Credit Institutions in the 24 months immediately preceding the month of application and at the time of completion of capital contribution, share purchase;

(iii) Information about the debt to be converted into capital contribution or share capital, including: The current status of the debt expected to be converted into capital contribution or share capital (the balance of the debt, the loan classification, the recoverability of the debt); the amount of capital contribution, the proportion of capital contribution or the number of shares, the ownership ratio of share capital formed from converting debt into capital contribution or share capital.

Article 7. Procedures and formalities for approving capital contributions and share purchases by credit institutions

1. The credit institution shall prepare one set of documents in accordance with Article 6 of this Circular and submit them directly or through postal services to the headquarters of the State Bank of Vietnam (One-Stop Service Department). In cases where the submitted documents are incomplete or invalid, within ten days from the date of receipt of the documents, the State Bank of Vietnam shall issue a document requesting the credit institution to supplement the documents.

2. Within forty-five days from the date of receiving complete and valid documents, the State Bank of Vietnam or the Banking Supervisory Authority shall issue a document approving or not approving the capital contribution, share purchase, and debt conversion into capital contribution or share capital of the credit institution; in case of non-approval, the State Bank of Vietnam and the Banking Supervisory Authority shall issue a document specifying the reasons.

3. Within twelve months from the date of approval, the credit institution must complete the capital contribution, share purchase, and debt conversion into capital contribution or share capital. If the credit institution fails to complete these actions beyond this period, the approval document of the State Bank of Vietnam and the Banking Supervisory Authority shall automatically become ineffective.

Article 8. Conditions for Increasing Capital at Subsidiaries and Associated Companies of Credit Institutions

1. Conditions for increasing capital at subsidiaries as stipulated in points a and c of Clause 1 of Article 1 of this Circular (excluding subsidiaries operating in the field of debt management and asset exploitation):

a) For credit institutions implementing capital increase:

(i) Ensuring the minimum capital adequacy ratio as stipulated in point b of Clause 1 of Article 138 of the Law on Credit Institutions in the twenty-four months immediately preceding the month when the credit institution has a document approving the increase in capital and at the time of completion of the capital increase;

(ii) Ensuring compliance with the limits on capital contribution and share purchase as stipulated in Article 137 of the Law on Credit Institutions in the twenty-four months immediately preceding the month when the credit institution has a document approving the increase in capital and at the time of completion of the capital increase;

(iii) The actual value of the charter capital at the time the credit institution issues a resolution approving the capital increase and at the time of completion of the capital increase shall not be lower than the statutory capital requirement;

(iv) The business results show profit according to the audited financial statements of the year immediately preceding the year in which the credit institution issues a resolution approving the capital increase, audited by an independent auditing organization;

(v) Not being subject to administrative penalties for non-compliance with asset classification, provision for risk management, and capital contribution or share purchase in the twelve months immediately preceding the month when the credit institution has a document approving the increase in capital;

(vi) Having a non-performing loan ratio according to the Governor's regulations on asset classification in the operations of credit institutions and foreign bank branches below three percent in the twelve months immediately preceding the month when the credit institution has a document approving the increase in capital;

(vii) Ensuring that the number of members, structure, term of office of the Board of Directors, Board of Members, Supervisory Board, General Director (Director) comply with the provisions of the Law on Credit Institutions at the time when the credit institution has a document approving the increase in capital.

b) For subsidiaries of credit institutions (excluding subsidiaries that are early-intervened credit institutions or specially-supervised credit institutions):

(i) Profitable business results according to financial statements in the three consecutive years immediately preceding the year when the credit institution has a document approving the increase in capital (for subsidiaries with more than three years of operation) or according to financial statements from the date of establishment to the time when the credit institution has a document approving the increase in capital (for subsidiaries with less than three years of operation), audited by an independent auditing organization and without accumulated losses up to the time when the credit institution has a document approving the increase in capital;

(ii) Not being subject to administrative penalties for the field of activity of the subsidiary in the twelve months immediately preceding the month in which the credit institution issues a resolution approving the capital increase.

2. Conditions for increasing capital at associated companies as stipulated in points a and c of Clause 1 of Article 1 of this Circular (excluding associated companies operating in the field of debt management and asset exploitation):

a) For credit institutions implementing capital increase:

(i) Ensuring the minimum capital adequacy ratio as stipulated in point b of Clause 1 of Article 138 of the Law on Credit Institutions in the twelve months immediately preceding the month when the credit institution has a document approving the increase in capital and at the time of completion of the capital increase;

(ii) Ensuring compliance with the limits on capital contribution and share purchase as stipulated in Article 137 of the Law on Credit Institutions in the twelve months immediately preceding the month when the credit institution has a document approving the increase in capital and at the time of completion of the capital increase;

(iii) The conditions stipulated in points a(iii), a(iv), a(v), a(vi), a(vii) of Clause 1 of this Article.

b) For associated companies of credit institutions (excluding associated companies that are early-intervened credit institutions or specially-supervised credit institutions):

(i) Profitable business results according to financial statements in the three consecutive years immediately preceding the year when the credit institution has a document approving the increase in capital (for associated companies with more than three years of operation) or according to financial statements from the date of establishment to the time when the credit institution has a document approving the increase in capital (for associated companies with less than three years of operation), audited by an independent auditing organization and without accumulated losses up to the time when the credit institution has a document approving the increase in capital;

(ii) Not being subject to administrative penalties for the field of activity of the associated company in the twelve months immediately preceding the month in which the credit institution issues a resolution approving the capital increase.

3. Conditions for increasing capital at subsidiaries and associated companies operating in the field of debt management and asset exploitation:

a) For credit institutions implementing capital increase:

(i) The conditions prescribed in point a(iii) of Clause 1 of this Article;

(ii) Ensuring the minimum capital adequacy ratio as stipulated in point b of Clause 1 of Article 138 of the Law on Credit Institutions at the time when the credit institution has a document approving the increase in capital and at the time of completion of the capital increase;

(iii) Ensuring compliance with the limits on capital contribution and share purchase as stipulated in Article 137 of the Law on Credit Institutions at the time when the credit institution has a document approving the increase in capital and at the time of completion of the capital increase.

b) For subsidiaries and associated companies of credit institutions:

Not being subject to administrative penalties for the field of activity of the subsidiary or associated company in the twelve months immediately preceding the month in which the credit institution issues a resolution approving the capital increase.

Article 9. Responsibilities of credit organizations

1. Shall bear legal responsibility for the accuracy, completeness, and truthfulness of the information provided in the application documents for approval of capital contribution and share purchase as stipulated in Article 6 of this Circular and the fulfillment of the conditions for increasing capital at subsidiaries and associated companies as stipulated in Article 8 of this Circular.

2. Report to the State Bank of Vietnam (through the Banking Supervision Agency) on the implementation of increasing capital at subsidiary companies and associated companies within five days from the date the new registered charter capital is recorded in the Enterprise Registration Certificate of the subsidiary company or associated company, detailing the fulfillment of the conditions for increasing capital at subsidiary companies and associated companies as stipulated in Article 8 of this Circular.

Chapter III
IMPLEMENTING PROVISIONS

Article 10. Effective Date

1. This Circular takes effect from July 1, 2024.

2. Circular No. 51/2018/TT-NHNN dated December 31, 2018, issued by the Governor of the State Bank of Vietnam, regarding the conditions, documents, procedures, and formalities for approving the contribution of capital and purchase of shares by credit institutions, shall cease to be effective from the date this Circular takes effect.

Article 11. Implementation Organization

The Director of the Office, the Head of Banking Supervision, the Heads of units under the State Bank of Vietnam, and credit institutions are responsible for organizing the implementation of this Circular./.