Decree No. 95/2008/ND-CP Amending and supplementing some articles of Decree No. 16/2001/ND-CP on the organization and operation of financial leasing companies

DECREE

Amending and supplementing some articles of Decree No. 16/2001/NĐ-CP dated May 2, 2001 on the organization and operation of financial leasing companies

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THE GOVERNMENT

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated December 12, 1997 and the Law amending and supplementing some articles of the Law on the State Bank of Vietnam No. 10/2003/QH11 dated June 17, 2003;

Pursuant to the Law on Credit Institutions No. 02/1997/QH10 dated December 12, 1997 and the Law amending and supplementing some articles of the Law on Credit Institutions No. 20/2004/QH11 dated June 15, 2004;

Pursuant to Law on Enterprises No. 60/2005/QH11 dated November 29, 2005;

At the proposal of the Governor of the State Bank of Vietnam,

DECREE:

Article 1. Amending and supplementing some articles of Decree No. 16/2001/NĐ-CP dated May 2, 2001 of the Government on the organization and operation of financial leasing companies, as follows:

1. Amend Article 2 as follows:

"Article 2.

1. A financial leasing company is a non-bank credit institution, a Vietnamese legal entity. Financial leasing companies are established and operate in Vietnam in the following forms:

a) Limited liability financial leasing company with two or more shareholders.

b) Limited liability financial leasing company with one shareholder.

c) Joint stock financial leasing company

2. The transfer of ownership and change of form (type) of financial leasing companies shall be carried out in accordance with the regulations of the State Bank of Vietnam.

2. Amend Article 3 as follows:

"Article 3.

1. A joint venture financial leasing company is a financial leasing company established in Vietnam with capital contributions from the Vietnamese side (including one or more credit institutions or Vietnamese enterprises) and the foreign side (including one or more foreign credit institutions) based on a joint venture agreement. A joint venture financial leasing company is established in the form of a limited liability company with two or more shareholders.

2. A wholly foreign-owned financial leasing company is a financial leasing company established in Vietnam with 100% charter capital owned by one or several foreign credit institutions. A wholly foreign-owned financial leasing company is established in the form of a limited liability company.

3. Amending Article 4 as follows:

"Article 4.

The transfer of equity contributions of the parties in a joint venture financial leasing company or a wholly foreign-owned financial leasing company shall be carried out in accordance with the provisions of the law and the guidelines of the State Bank of Vietnam."

4. Supplementing Clauses 6, 7, and 8 to Article 7 as follows:

"6. Foreign credit institutions include banks, finance companies, and leasing companies(lease/leasing company) established under foreign law. In the case of a foreign leasing company, the balance of financial leasing (financial lease) and loans must account for at least 70% of the total assets of the company.

7. The country of origin for a foreign credit institution is the country where the foreign credit institution was established.

8. Subsidiary company of a financial leasing company.

A company is considered a subsidiary of a financial leasing company if it falls into one of the following cases:

a) More than 50% of the charter capital or the total number of ordinary shares issued belongs to the financial leasing company;

b) The appointment of the majority or all members of the Board of Directors and General Manager (Director) of the company is within the decision-making power of the financial leasing company;

c) The amendment and supplementation of the Charter of the organization and operation of the company is within the decision-making power of the financial leasing company."

5. Amending Point b, Clause 1 of Article 8 as follows:

"b) Having sufficient statutory capital as prescribed by the Government at the time of applying for the establishment of a financial leasing company."

6. Amending Clause 2 of Article 8 as follows:

"2. In addition to the conditions stipulated in Clause 1 of this Article, the foreign party in a joint venture financial leasing company or a wholly foreign-owned financial leasing company must meet the following conditions:

a) Being permitted to engage in financial leasing activities in Vietnam by the competent authority according to the laws of the country of origin.

b) Having total assets exceeding 10 billion US dollars at the end of the year prior to the date of application, except in cases where there are different provisions in the Bilateral Investment Agreement between Vietnam and the country of origin."

7. Replacing Articles 13, 14, and 15 with new Articles 13, 14, and 15 as follows:

“Article 13.

1. The establishment of branches and representative offices both domestically and abroad by financial leasing companies must be approved in writing by the State Bank. The conditions for the dossier and procedures for establishing branches and representative offices of financial leasing companies are applied in accordance with Article 33 of the Law on Credit Institutions, the guidelines of the State Bank of Vietnam, and current laws.

2. The establishment of subsidiaries by financial leasing companies to operate in certain financial, banking, and insurance fields shall be carried out in accordance with the regulations of the State Bank of Vietnam and current laws.

Article 14.

1. Board of Directors

a) The Board of Directors has the function of managing the financial leasing company, having full authority to act on behalf of the financial leasing company to decide and implement the rights and obligations of the financial leasing company, except for matters within the jurisdiction of the Shareholders' Meeting (for joint stock financial leasing companies) or the owner (for limited liability financial leasing companies with one shareholder) or the capital contributors (for limited liability companies with two or more shareholders).

b) The Board of Directors has a minimum of three members, including those with reputation, professional ethics, and knowledge of financial and banking operations. The Chairman and other members of the Board of Directors may not delegate their duties and powers to persons who are not members of the Board of Directors.

c) The term of office of the Board of Directors and its members ranges from three to five years, as specifically provided in the Charter of the organization and operation of the financial leasing company. In the event that a member of the Board of Directors is elected as a supplementary member or replaces a member of the Board of Directors who has been relieved or dismissed during the term, the term of office of that member of the Board of Directors is the remaining period of the term of the Board of Directors. Members of the Board of Directors may be re-elected for unlimited terms and may be relieved or dismissed at any time by the competent authority that elects or appoints or designates them.

d) The Board of Directors uses the seal of the leasing finance company to perform its duties.

2. Audit Committee

a) The Audit Committee has the duty to check financial activities; monitor compliance with accounting systems, safety in the operations of the leasing finance company, conduct internal audits during each period and in each field to accurately assess business operations and the current financial status of the leasing finance company.

b) The Audit Committee must have at least three members, including one Chairperson and at least half of the members must be full-time. Members of the Audit Committee must meet the professional qualifications and ethical requirements set forth by the State Bank of Vietnam.

c) The Audit Committee has a support staff and may use the internal inspection and control system of the leasing finance company to carry out its tasks.

d) The term of office of the Audit Committee and its members ranges from three to five years, as specifically provided for in the Charter of the leasing finance company. In cases where additional members are elected to replace those who have been relieved of their duties during their term, the term of such members shall be the remaining duration of the Audit Committee's term. Members of the Audit Committee may be re-elected without limitation on the number of terms.

3. General Director (Director)

a) The Board of Directors appoints one of its members as the General Director (Director) or hires a General Director (Director). The General Director (Director) of the leasing finance company is responsible to the Board of Directors and under the law for managing daily operations according to the tasks and authorities consistent with this Decree and other relevant laws. The General Director (Director) is the legal representative of the leasing finance company, except as otherwise provided in the Charter of the leasing finance company.

b) The term of office of the General Director (Director) does not exceed five years, as specifically provided for in the Charter of the leasing finance company. The General Director (Director) may be reappointed without limitation on the number of terms.

c) The General Director (Director) and Deputy General Director (Deputy Director) of the leasing finance company must meet the criteria stipulated in Clause 2, Article 39 of the Law on Credit Institutions.

d) The General Director (Director) of the leasing finance company is not permitted to serve as the General Director (Director) or Chairman of the Board of Directors of another credit institution, except in cases where that organization is a subsidiary of the leasing finance company.

đ) The Board of Directors specifies the structure, functions, and tasks of the support staff for the General Director (Director).

Article 15.

The State Bank of Vietnam provides specific guidance on the functions, tasks, authorities, election procedures, appointment, relief, dismissal, and approval of members of the Board of Directors, Audit Committee, and General Director (Director) of the leasing finance company."

1. Amend Point b Clause 1 Article 16 as follows:

"b) Issuing bonds, deposit certificates, and other securities with a term of one year or longer to raise funds from organizations and individuals both domestically and internationally in accordance with the regulations of the State Bank of Vietnam;"

2. Add Clause 9 to Article 16 as follows:

"9. A leasing finance company with a charter capital equivalent to the statutory capital requirement for a financial company is permitted to undertake the following transactions in accordance with the guidelines of the State Bank of Vietnam:

a) Providing short-term loans to supplement working capital for lessees.

b) Conducting factoring activities for lessees."

Article 2. Implementation Provisions

1. This Decree takes effect fifteen days after its publication in the Official Gazette.

2. Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial People's Committees directly under the central government shall be responsible for enforcing this Decree./.