Circular No. 36/2015/TT-NHNN on restructuring of credit institutions

• Official number: 36/2015/TT-NHNN
• Legislation Type: Circular
• Organization: The State Bank
• Signer: Nguyen Kim Anh
• Issued Date: 31/12/2015

THE STATE BANK OF VIETNAM -------	SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness ---------------
No. 36/2015/TT-NHNN	Hanoi, December 31, 2015

CIRCULAR

ON RESTRUCTURING OF CREDIT INSTITUTIONS

Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

Pursuant to the Law on credit institutions No. 47/2010/QH12 dated June 16, 2010;

Pursuant to the Law on enterprises No. 68/2014/QH13 dated November 26, 2014;

Pursuant to the Law on competition No. 27/2004/QH11 dated December 3, 2004;

Pursuant to the Government’s Decree No. 156/2013/ND-CP dated November 11, 2013 defining the functions, tasks, entitlements and organizational structure of the State Bank of Vietnam;

At the request of the Chief Banking Inspector-Supervisor;

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Chapter I

GENERAL PROVISIONS

Article 1. Scope

1. This Circular deals with restructuring of credit institutions in the form of acquisition, consolidation or conversion of business types of credit institutions.

2. Each credit institution being a wholly state-owned single-member limited liability company that is converted into a joint-stock company shall comply with law on conversion of state-owned companies into joint-stock companies.

3. Each commercial bank contributing or buying shares of a credit institution that leads to conversion of business type of the credit institution shall comply with the State Bank of Vietnam (hereinafter referred to as the State Bank) in terms of requirements, documents, procedures for capital contribution and purchase of credit institutions’ shares.

4. If the State Bank contributes capital or buys shares of a credit institution subject to special control leading conversion of business type of the credit institution, it shall comply with regulations of the Prime Minister on compulsory purchase of shares and contribution to the credit institution under special control.

5. The restructuring of credit institutions in accordance with policies of the Government in terms of restructuring of the system of credit institutions shall comply with projects approved by the Government, the Prime Minister or a competent authority and procedures prescribed in herewith.

6. The restructuring of people's credit funds and microfinance institutions shall comply with separate regulations of the State Bank.

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1. Credit institutions include:

a) commercial banks;

b) and financial companies.

2. Organizations or individuals related to restructuring of credit institutions.

Article 3. Interpretation of terms

For the purposes of this Circular, these terms below shall be construed as follows:

1. Acquisition of credit institutions means that one or some credit institutions (hereinafter referred to as acquired credit institutions) transfer all assets, legitimate rights, obligations and interests into another credit institution (hereinafter referred to as the acquiring credit institution); after that, the acquired companies shall cease to exist.

2. Consolidation of credit institutions means that one or some credit institutions (hereinafter referred to as consolidating credit institutions) transfer all assets, legitimate rights, obligations and interests into another credit institution (hereinafter referred to as the consolidated credit institution); after that, the acquired companies shall cease to exist.

3. Post-acquisition credit institution means an acquiring credit institution after the acquisition is approved by the State Bank.

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5. Credit institutions engaging in acquisition or consolidation means credit institutions engaging in acquisition or consolidating credit institutions.

6. Representing credit institution means a consolidating credit institution authorized by the rest of consolidating credit institutions to act as the central point to deal with issues related to the consolidation of credit institutions.

7. Post-restructuring credit institution means a post-acquisition credit institution, a consolidated credit institution or a credit institution resulting from a conversion (hereinafter referred to as converted credit institution).

8. Competent body of credit institution means a body of a credit institution which is competent to decide its acquisition, consolidation or conversion of business type as prescribed in law and charters those credit institutions.

Article 4. Cases of restructuring of credit institutions

1. Cases of acquisition of credit institutions:

a) A commercial bank or a finance company or is merged into another commercial bank;

b) A financial company is merged into another financial company.

2. Cases of consolidation of credit institutions:

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b) A commercial bank and a finance company consolidate into another commercial bank;

c) A financial company and a financial company consolidate into another financial company.

3. Cases of conversion of business types of credit institutions:

a) A commercial bank or a financial company convert its form of limited liability company into joint-stock company and vice versa;

b) A commercial bank or a financial company convert its form of single-member limited liability company into multi-member limited liability company and vice versa.

Article 5. Rules for preparation of application

1. Each application for approval for restructuring of credit institutions shall be made in one set of original in Vietnamese. Each application in a foreign language must be consularly legalized and translated into Vietnamese, other than applications that are exempt from legal consular legalization as prescribed in law of Vietnam.

2. Each copy of documents or certificates must be a copy that is issued from the master register or a certified true copy or a copy presented together with the original for comparison. With regard to the case that the copies are presented together with the originals for comparison, the person in charge of comparison must certify the accuracy between them.

3. Each set of application must have a list of documents.

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1. The scope of operation of post-restructuring credit institutions must be in accordance with the scope of operation of each type of credit institutions as prescribed in law.

2. The scope of operation of a post-acquisition credit institution shall include activities of the acquiring credit institution. The post-restructuring credit institution may additionally include activities of the acquired credit institution(s) in its scope of operation if it satisfies operation requirements as prescribed in law.

3. The scope of operation of the consolidated credit institution shall include activities of the consolidating credit institutions if it satisfies operation requirements as prescribed in law.

4. The scope of operation of a converted credit institution shall include activities of the credit institution that existed before the conversion (hereinafter referred to as the converting credit institution).

Article 7. Consultancy on restructuring of credit institutions

1. Credit institutions engaging in acquisition or consolidation and converting credit institutions may use restructuring consultancy services.

2. Each restructuring consultancy must meet all of the following conditions:

a) It is licensed to provide finance and banking consultancy services;

b) The consultancy, managers, executives, major shareholders, owners and capital contributors of the consultancy are relevant members, customers granted credit without guarantee or credit with incentives of credit institutions engaging in acquisition or consolidation or converting credit institutions;

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Article 8. Announcement of restructuring of credit institutions

1. Upon the approval for rules of acquisition, consolidation or conversion of business type issued by the State Bank, the credit institutions engaging in acquisition or consolidation or the converting credit institution must announce the following information by means of media of the State Bank, in a daily written newspaper nationwide in 3 consecutive issues or an online newspaper of Vietnam within 7 working days and at its headquarters, branches, offices and affiliated units:

a) Number and date of issue of the approval for rules of acquisition, consolidation or conversion of business type promulgated by the State Bank;

b) Names and addresses of headquarters of credit institutions engaging in acquisition or consolidation or the converting credit institution;

c) Charter capital of each credit institution engaging in acquisition or consolidation or the converting credit institution at the submitting time of the application for approval for restructuring;

d) Legal representative of each credit institution engaging in acquisition or consolidation or the converting credit institution;

dd) Expected information about each post-restructuring credit institution, including: name, headquarters address; charter capital; legal representative; business type.

2. Upon the approval for acquisition, consolidation or conversion of business type issued by the State Bank, each post-restructuring credit institution must announce the following information by means of media of the State Bank, in a daily written newspaper nationwide in 3 consecutive issues or an online newspaper of Vietnam within 7 working days and at its headquarters, branches, offices and affiliated units:

a) Number and date of issue of the approval for acquisition, consolidation or conversion of business type promulgated by the State Bank;

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c) Name and headquarters address of the post-restructuring credit institution;

d) Charter capital of the post-restructuring credit institution;

dd) Legal representative of the post-restructuring credit institution;

e) Business type of the post-restructuring credit institution;

g) List, contribution rate of founding shareholders, major shareholders, strategic shareholders, capital contributors and owners of the post-restructuring credit institution;

h) Expected opening date regarding the consolidated credit or the converted credit institution;

i) Official information about the termination of operation of the acquired credit institution, the consolidating credit institution or the converting credit institution, including:

(i) Name and headquarters address;

(ii) Number and date of issue of the establishment and operation license, certificate of enterprise registration or equivalent documents;

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(iv) Legal representative;

(v) Date of termination of operation.

3. Credit institutions engaging in acquisition or consolidation may agree to jointly announce the information prescribed in Clause 1 of this Article.

Chapter II

ACQUISITION AND CONSOLIDATION OF CREDIT INSTITUTIONS

Article 9. Rules for acquisition and consolidation

1. Follow rules of agreement; respect the normal activities of credit institutions; respect lawful rights and interests of clients during the process of acquisition or consolidation.

2. Comply with this Circular and relevant laws.

3. Protect confidentiality in order to ensure stable operation of credit institutions engaging in acquisition or consolidation before the project for acquisition or consolidation is ratified by the competent bodies of credit institutions. All documents and materials on acquisition or consolidation must be made in a prudent, truthful and accurate manner so as to avoid misunderstanding.

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5. The establishment and operation license of each consolidating credit institution shall become invalid on the date of opening ceremony of the consolidated credit institution. The establishment and operation license of each acquired credit institution shall become invalid on the date of enterprise registration of the post-acquisition credit institution.

Article 10. Conditions for acquisition or consolidation

1. Each credit institution engaging in acquisition or consolidation must meet all of the following conditions:

a) It does not fall into cases of banned economic concentration, except for cases of exemption from banned economic concentration as prescribed in law on competition;

b) It has a project for acquisition or consolidation as prescribed in Article 13 of this Circular which is approved by the competent body of the credit institutions engaging in acquisition or consolidation.

2. The post-acquisition credit institution or the consolidated credit institution must comply with regulations on reserves requirement, capital holding rates, share rates and conditions for banking activities.

Article 11. Application for approval for acquisition

1. Each application for approval for rules of acquisition shall include:

a) An application form for approval for acquisition bearing signatures of legal representatives of credit institutions engaging in acquisition using the form prescribed in Appendix 1 issued herewith;

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c) Copies of establishment and operation licenses and copies of written approvals for amendments to the license; certificate of enterprise registration and equivalent documents of credit institutions engaging in acquisition;

d) Reports of credit institutions engaging in acquisition on non-violation against regulations on economic concentration; or a rely of a competition management agency in case of economic concentration requiring notification; or a decision granting exemption from banned economic concentration as prescribed in law on competition;

dd) A project for acquisition prescribed in Article 13 of this Circular;

e) Minutes, resolutions or decisions of competent bodies of credit institutions engaging in acquisition that approve the project for acquisition, acquisition contract, charter of post-acquisition credit institutions and other issues related to acquisition of credit institutions.

g) Acquisition contracts approved by competent bodies of credit institutions engaging in acquisition and bearing signatures of legal representatives of those credit institutions and containing primary contents prescribed in Point a Clause 2 Article 195 of the Law on enterprises;

h) Financial statements in 3 years preceding the year of submitting the application for approval for acquisition rules of credit institutions engaging in acquisition that are audited by independent audit organizations without any qualified opinion. If there is no audited financial statement of the year preceding the year of submitting the application for approval for acquisition rules, the credit institution may submit the non-audited financial statement, and then submit an audited financial statement as soon as an independent audit organization issues an auditor's report. Each credit institution engaging in acquisition must take responsibility for its submitted financial statement.

2. Each application for approval for acquisition shall include:

a) A written document of legal representative of the acquiring credit institution requesting for:

(i) Approval for acquisition, change of charter capital; certifying registration of charter of the post-acquisition credit institution; or

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b) An application for approval by the State Bank prescribed in Point a (ii) of this Clause as prescribed by the State Bank and relevant laws;

c) Minutes, resolutions or decisions of competent bodies of credit institutions engaging in acquisition that approve the modification to the project for acquisition and other issues related to acquisition (if any);

d) A document of legal representative of the acquiring credit institution clarifying the modified contents in comparison with the project for acquisition submitted in order for the Governor of the State Bank to approve the acquisition rules (if any);

dd) A commitment of legal representative of the acquiring credit institution that the post-acquisition credit institution shall comply with Clause 2 Article 10 of this Circular.

Article 12. Application for approval for consolidation

1. Each application for approval for rules of acquisition shall include:

a) An application form for approval for consolidation bearing signatures of legal representatives of consolidating credit institutions using the form prescribed in Appendix 1 issued herewith;

b) A written authorization issued by the consolidating credit institutions to give powers to the representing credit institution to perform the tasks related to the consolidation as prescribed in this Circular;

c) Copies of establishment and operation licenses and copies of written approvals for amendments to the license; certificates of enterprise registration and equivalent documents of consolidating credit institutions;

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dd) A project for consolidation prescribed in Article 13 of this Circular;

e) Minutes, resolutions or decisions of competent bodies of consolidating credit institutions that approve the project for consolidation, consolidation contract, charter of consolidated credit institutions, list of personnel to be elected or appointed to the Board of Directors, the Board of members or the Control Board of the consolidated credit institutions and other issues related to acquisition of credit institutions;

g) Consolidation contracts approved by competent bodies of consolidating credit institutions and bearing signatures of legal representatives of those credit institutions and containing primary contents prescribed in Point a Clause 2 Article 194 of the Law on enterprises;

h) Financial statements in 3 years preceding the year of submitting the application for approval for rules of consolidation of consolidating credit institutions that are audited by independent audit organizations without any qualified opinion. If there is no audited financial statement of the year preceding the year of submitting the application for approval for rules of consolidation, the credit institution may submit the non-audited financial statement, and then submit an audited financial statement as soon as an independent audit organization issues an auditor's report. Each consolidating credit institution must take responsibility for its submitted financial statement.

i) Charter draft of the consolidated credit institution approved by competent bodies of consolidating credit institutions;

k) A draft of basic internal regulations in terms of organization and operation of the consolidated credit institution, at least containing the internal regulations prescribed in Clause 2 Article 93 of the Law on credit institutions and the following provisions:

(i) Regulations on organization and operation of Board of Directors, Member assembly, the Control Board and executives;

(ii) Regulations on organization and operation of headquarters, branches and other affiliates;

l) A list of personnel to be elected or appointed to the Board of Directors, the Board of members or the Control Board, General Director (Director) of the consolidated credit institution;

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2. Each application for approval for consolidation shall include:

a) A written document of legal representative of the representing credit institution requesting for:

(i) Approval for consolidation, change of charter capital; certifying registration of charter; or

(ii) Approval for other contents (if any);

b) An application for approval by the State Bank prescribed in Point a (ii) of this Clause as prescribed by the State Bank and relevant laws;

c) Charter of the consolidated credit institution approved by its competent body;

d) Minutes, resolutions or decisions of competent bodies of consolidating credit institutions that approve the modification to the project for consolidation and other issues related to acquisition (if any);

dd) A document of legal representative of the representing credit institution clarifying the modified contents in comparison with the project for consolidation submitted in order for the Governor of the State Bank to approve the rules of acquisition (if any);

e) Minutes, resolutions or decisions of the competent body of consolidated credit institution that approve the charter; election and appointment of positions, members of the Board of Directors, Member assembly or the Control Board; regulations on organization and operation of Board of Directors, Member assembly or the Control Board of the consolidated credit institution and other issues related to the consolidated credit institution;

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h) Decisions of Board of Directors or Member assembly of the consolidated credit institution in terms of appointment of General Director (Director), Deputy General Director (Deputy Director) and Chief Accountant;

i) Internal regulations on organization and operation of the consolidated credit institution in accordance with Point k Clause 1 of this Article that are approved by competent body, ratified by Board of Directors or Member assembly of the consolidated credit institution;

k) A commitment of legal representative of the representing credit institution that the consolidated credit institution shall comply with Clause 2 Article 10 of this Circular.

Article 13. Projects for acquisition or consolidation

1. Each project for acquisition or consolidation must be approved by competent bodies of credit institutions engaging in acquisition or consolidation and bearing signatures, seal and responsibility of legal representatives of those credit institutions.

2. Each project for acquisition or consolidation must at least contain:

a) Name, address and website (if any) of each credit institution engaging in acquisition or consolidation;

b) Names, addresses and phone numbers of owners, President and members of the Board of Directors, President and members of the Board of members, the head and members of the Control Board, General Director (Director) of each credit institution engaging in acquisition or consolidation;

c) Reasons for acquisition or consolidation;

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dd) Actual value of charter capital, bad debts, reserves requirements in the operation and the observance of those reserves requirements of the credit institutions engaging in acquisition or consolidation before the acquisition or consolidation; charter of the post-acquisition credit institution or consolidated credit institution;

e) Roadmap for acquisition or consolidation;

g) Method and time of swap of stakes or shares; forms of swap of stakes or shares and equivalent swap rates;

h) The organization, conditions, composition, procedures for a meeting of competent body of each credit institution engaging in acquisition or consolidation, the post-acquisition credit institution or the consolidated credit institution as prescribed by law and the charter of the credit institution in order to approve the acquisition or consolidation; the authorization granted to the acquiring credit institution or the representing credit institution to convene such meeting;

i) Rights and obligations of credit institutions engaging in acquisition or consolidation and relevant organizations or individuals (if any);

k) Settlement plan for employees working at the credit institutions engaging in acquisition or consolidation;

l) A list and contribution rate of founding shareholders, major shareholders and capital contributors of the post-acquisition credit institution or the consolidated credit institution;

m) Plan for diagram of organizational structure, personnel, operation network and other issues related to the organization and operation of the post-acquisition credit institution or the consolidated credit institution;

n) Measures for conversion and combination of management information system, internal control, internal audit and transmission system to ensure the smooth operation before and after acquisition or consolidation;

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p) Evaluate impact and settlement plan (if any) of the acquisition or consolidation to ensure the normal operation of credit institutions engaging in acquisition or consolidation and the safety and stability of the system of credit institutions.

q) The observance of requirements prescribed in Clause 2 Article 10 of this Circular.

Article 14. Procedures for approval for acquisition

1. Approval for rules for acquisition:

a) Each acquiring credit institution shall prepare an application for approval for acquisition rules as prescribed in Clause 1 Article 11 of this Circular and send it to the State Bank directly or by post.

Within 20 days from the date on which the above application is received, the State Bank shall send the credit institution a document certifying the receipt of satisfactory application or requiring completion of the application;

b) Within 30 days from the day on which the satisfactory application is received, the State Bank shall send documents on consultation about the application in terms of particular issues to the following authorities:

(i) The People’s Committee of central-affiliated city or province (hereinafter referred to as province) where each credit institution engaging in acquisition has its headquarters located in terms of the impact of acquisition of the credit institutions on the stable economic-social situation in the province and its opinions about the acquisition;

(ii) The branch of the State Bank of province where each credit institution engaging in acquisition has its headquarters located in terms of evaluation of reality of organization and operation of the credit institution engaging in acquisition and its opinions about the acquisition;

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2. Within 5 days from the day on which the State Bank grants an approval for acquisition rules, each credit institution engaging in acquisition must disclose information as prescribed in Clause 1 or Clause 3 Article 8 of this Circular.

3. Approval for acquisition:

a) Within 60 days from the date on which the State Bank grants an approval for acquisition rules, the acquiring credit institution shall send a set of application for approval for acquisition prescribed in Clause 2 Article 11 of this Circular to the State Bank directly or by post. After the above time limit, if the State Bank does not receive the sufficient application required, the approval for acquisition rules shall become invalid.

Within 10 days from the date on which the above application is received, the State Bank shall send the credit institution a document certifying the receipt of satisfactory application or requiring completion of the application;

b) Within 30 days from the day on which the satisfactory application is received, the State Bank shall grant a document approving the acquisition, modifying to the establishment and operation license of the acquiring credit institution, certifying registration of the charter and approving other contents (if any). If the application is rejected, the State Bank must provide explanation in writing.

4. Within 45 days from the effective date of the approval for acquisition, the acquiring credit institution shall follow the procedures for enterprise registration as prescribed; disclose information as prescribed in Clause 2 Article 8 of this Circular and send a report on completion of acquisition to the State Bank.

5. Within 5 working days from the date on which the establishment and operation license of the acquired credit institution become invalid, the acquired credit institution must return such license to the State Bank.

Article 15. Procedures for approval for consolidation

1. Approval for consolidation rules:

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Within 20 days from the date on which the above application is received, the State bank shall send the credit institution a document certifying the receipt of satisfactory application or requiring completion of the application;

b) Within 30 days from the day on which the satisfactory application is received, the State bank shall send documents on consultation about the application to the following authorities:

(i) The People’s Committee of province where each consolidating credit institution has its headquarters located and the consolidated credit institution has its expected headquarters located in terms of the impact of consolidation of the credit institutions on the stable economic-social situation in the province and its opinions about the consolidation;

(ii) The branch of the State bank of province where each consolidating credit institution has its headquarters located in terms of evaluation of reality of organization and operation of the consolidating credit institution and its opinions about the consolidation;

c) Within 60 days from the day on which the satisfactory application is received, the State Bank shall grant an approval for consolidation rules of the credit institution and the list of expected personnel. If the application is rejected, the State bank must provide explanation in writing.

2. Within 5 working days from the date on which the State Bank approves the consolidation rules, the consolidating credit institution shall disclose information as prescribed in Clause 1 or 3 Article 8 of this Circular.

3. Approval for consolidation:

a) Within 60 days from the date on which the State bank grants an approval for consolidation rules, the representing credit institution shall send a set of application for approval for consolidation prescribed in Clause 2 Article 12 of this Circular to the State bank directly or by post. After the above time limit, if the State bank does not receive the sufficient application required, the approval for acquisition rules shall become invalid.

Within 10 days from the date on which the above application is received, the State bank shall send the credit institution a document certifying the receipt of satisfactory application or requiring completion of the application;

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4. Within 45 days from the effective date of the approval for consolidation, the representing credit institution shall follow the procedures for enterprise registration as prescribed; the consolidated credit institution shall disclose information as prescribed in Clause 2 Article 8 of this Circular, hold an opening ceremony as prescribed and send a report on completion of consolidation to the State Bank.

5. Within 5 working days from the date on which the establishment and operation license of the consolidating credit institution become invalid, the consolidating credit institution must return such license to the State Bank.

Chapter III

CONVERSION OF BUSINESS TYPES OF CREDIT INSTITUTIONS

Article 16. Rules for conversion of business types of credit institutions

1. The transfer of stakes or shares, stock offer must comply with regulations of the State Bank, law on securities and relevant laws.

2. Each credit institution may only convert its business type in accordance with business types prescribed in Article 6 of the Law on credit institutions and regulations of the State Bank.

3. Protect confidentiality in order to ensure stable operation of credit institution before the project for conversion of business type is ratified by the competent bodies of credit institutions. All documents and materials on conversion of business type must be made in a prudent, truthful and accurate manner so as to avoid misunderstanding.

4. It is strictly prohibited to disperse properties in any form. The transfer and sale of property during the process of conversion of business type must be conducted publicly and transparently, in accordance with regulations of law and agreement of contracting parties, ensure the safety of property and do not affect the interests of credit institutions and other organizations and individuals related to conversion of business type.

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Article 17. Conditions for conversion of business types

1. The converting credit institution must have a project for conversion of business type prescribed in Article 19 of this Circular and it is ratified by its competent body.

2. If a credit institution having its business type converted from a limited liability company into a joint-stock company, it must satisfy fully the following conditions:

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

b) The converting credit institution must satisfy the conditions for stock offer as prescribed in law on securities and relevant laws;

c) Founding shareholders (if any), major shareholders and/or strategic shareholders of the converted credit institution must satisfy the conditions prescribed in law on founding shareholders of a newly established credit institution.

d) Shareholders and/or strategic shareholders being foreign investors of the converted credit institution must satisfy the conditions prescribed in law on foreign investors buying shares of Vietnamese credit institutions;

dd) Each organization or individual buying shares must comply with law on share ownership rates.

3. If a credit institution having its business type converted from a single-member limited liability company into a multi-member limited liability company and vice versa, from a joint-stock company into a limited liability company, it must satisfy fully the following conditions:

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b) Owners, capital contributors receiving transfer of stakes and/or new capital contributors of the converted credit institution must satisfy the conditions prescribed in law on owners and founding members of a newly established credit institution;

c) Owners, capital contributors receiving transfer of stakes and/or new capital contributors of the converted credit institution must comply with regulations of law on stake rates.

Article 18. Application for approval for conversion of business types

1. Each application for approval for conversion of business type rules shall include:

a) An application form for approval for conversion of business type bearing signatures of legal representatives of the credit institution using the form prescribed in Appendix 2 issued herewith;

b) Copies of establishment and operation license and copies of written approvals for amendments to the license; certificate of enterprise registration and equivalent documents of the credit institution;

c) A project for conversion of business type prescribed in Article 19 of this Circular;

d) Minutes, resolutions or decisions of competent bodies of consolidating credit institutions that approve the project for conversion, charter draft, list of personnel to be elected or appointed to the Board of Directors, the Board of members or the Control Board of the converted credit institution and other issues related to conversion of business type;

dd) Financial statements in 3 years preceding the year of submitting the application for approval for rules of conversion of business type that are audited by independent audit organizations without any qualified opinion. If there is no audited financial statement of the year preceding the year of submitting the application for approval for rules of conversion, the credit institution may submit the non-audited financial statement, and then submit an audited financial statement as soon as an independent audit organization issues an auditor's report. The credit institution must take responsibility for its submitted financial statement;

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g) A draft of basic internal regulations in terms of organization and operation of the converted credit institution, at least containing the internal regulations prescribed in Clause 2 Article 93 of the Law on credit institutions and the following provisions:

(i) Regulations on organization and operation of Board of Directors, Member assembly, the Control Board and executives;

(ii) Regulations on organization and operation of headquarters, branches and other affiliates;

h) A list of personnel to be elected or appointed to the Board of Directors, the Board of members or the Control Board, General Director (Director) of the converted credit institution;

i) Documents proving qualified personnel to be elected or appointed to the Board of Directors, the Board of members or the Control Board, General Director (Director) of the converted credit institution;

k) Materials and information provided for investors, at least containing: conditions for founding shareholders, major shareholders, strategic shareholders, shareholders being foreign investors, owners, capital contributors receiving transfer of stakes and/or new capital contributors of the converted credit institution;

l) Apart from the documents prescribed in Points a, b, c, d, dd, e, g, h, i and k of this Clause, a credit institution converted from a limited liability company into a joint-stock company through private offering must submit the following additional documents:

(i) An application for registration of private stock offering using the form prescribed in Appendix 3 issued herewith;

(ii) Decisions of owners and/or Member assembly of the credit institution approving the plan for offering and using the revenues therefrom;

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2. Each application for approval for conversion of business type shall include:

a) A written document of legal representative of the credit institution requesting for:

(i) Approval for conversion of business type; recognition of charter registration;

(ii) Approval for other contents (if any);

b) An application for approval by the State bank prescribed in Point a (ii) of this Clause as prescribed by the State bank and relevant laws;

c) A charter of the converted credit institution which is ratified by its competent body;

d) Minutes, resolutions or decisions of the competent body of the converting credit institution that approve the modification to the project for conversion of business type and other issues related to conversion of business type (if any);

dd) A written document of the legal representative of the converting credit institution clarifying the contents of modification in comparison with the project for conversion of business type requesting to the Governor of the State bank to approve the rules of conversion of business type (if any);

e) Minutes, resolutions or decisions of the competent body of converted credit institution that approve the charter; election and appointment of positions, members of the Board of Directors, Member assembly or the Control Board; regulations on organization and operation of Board of Directors, Member assembly or the Control Board of the converted credit institution and other issues related to the converted credit institution;

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h) Decisions of Board of Directors or Member assembly of the converted credit institution in terms of appointment of General Director (Director), Deputy General Director (Deputy Director) and Chief Accountant;

i) List, contribution rate of capital contributors, founding shareholders, major shareholders, strategic shareholders and/or shareholders being foreign investors of the converted credit institution;

k) Internal regulations on organization and operation of the converted credit institution in accordance with Point g Clause 1 of this Article that are approved by competent body, ratified by Board of Directors or Member assembly of the converted credit institution;

l) Apart from the documents prescribed in Points a, b, c, d, dd, e, g, h, i and k of this Clause, a credit institution converted from a limited liability company into a joint-stock company must submit the following additional documents:

(i) A report on results of stock offering and a certification of revenues earned from the offering issued by a commercial bank where its escrow account is opened;

(ii) Documents of founding shareholders (if any), major shareholders and/or strategic shareholders of the converted credit institution similar to documents of a founding shareholder of a credit institution as prescribed in regulations on issuance of organization and operation licenses to credit institutions issued by the State Bank.

(iii) Documents of shareholders and/or strategic shareholders being foreign investors of the converted credit institution in accordance with regulations of the State Bank on documents and procedures for approval for foreign investors buying shares of Vietnamese credit institutions;

m) Apart from the documents prescribed in Points a, b, c, d, dd, e, g, h, i and k of this Clause, a credit institution converted from a single-member limited liability company into a multi-member limited liability company and vice versa, or a credit institution converted from a joint-stock company into a limited liability company must submit the following additional documents:

(i) Stake transfer contract or an agreement on investment contribution or documents certifying the completion of capital transfer;

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(iii) Documents of owners, capital contributors receiving transfer of stakes and/or new capital contributors of the converted credit institution similar to documents of an owner or a founding member of a credit institution as prescribed in regulations on issuance of organization and operation licenses to credit institutions issued by the State Bank.

Article 19. Projects for conversion of business types

1. Each project for conversion of business type must be approved by competent body of the credit institution and bearing signatures, seal and responsibility of legal representative of such credit institution.

2. Each project for conversion of business type must at least contain:

a) Name, address and website (if any) of the credit institution;

b) Names, addresses and phone numbers of owners, President and members of the Board of Directors, President and members of the Board of members, the head and members of the Control Board, General Director (Director) of the credit institution;

c) Reasons for conversion of business type;

d) Summary report on financial situation and income of the converting credit institution in 3 years preceding the year of submitting application for approval for conversion of business type;

dd) Actual value of charter capital before and after the conversion of business type of the credit institution; bad debts, reserves requirements in the operation and the observance of those reserves requirements of the credit institution before the conversion of business type;

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g) Plan for diagram of organizational structure, personnel, operation network and other issues related to the organization and operation of the converted credit institution;

h) Intended business plan in the first 3 years of the converted credit institution, which at least contain: analysis of the market, business strategy, targets and plan; intended financial statements of each year (the balance sheet, income statement, statement of cash flows, reserves requirement in the operation, targets for performance and description of possibilities of financial targets in each year);

i) Stake and share ownership rates, conditions for founding shareholders, major shareholders, strategic shareholders, shareholders being foreign investors, owners, capital contributors receiving transfer of stakes and/or new capital contributors of the converted credit institution; swap rate of stakes and/or shares; method and time of swap.

Article 20. Procedures for approval for conversion of business types

1. Procedures for approval for rules of conversion of business type shall be conducted as follows:

a) A credit institution shall prepare an application for approval for rules of conversion of business type as prescribed in Clause 1 Article 18 of this Circular and send it to the State Bank directly or by post.

Within 20 days from the date on which the above application is received, the State bank shall send the credit institution a document certifying the receipt of satisfactory application or requiring completion of the application;

b) Within 30 days from the day on which the satisfactory application is received, the State bank shall send documents on consultation about the application to the branch of the State bank of province where the credit institution has its headquarters located in terms of evaluation of reality of organization and operation of such credit institution;

c) Within 60 days from the day on which the satisfactory application is received, the State Bank shall grant an approval for rules of conversion of business type of the credit institution and the list of expected personnel. If the application is rejected, the State bank must provide explanation in writing.

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3. Procedures for approval for conversion of business type shall be conducted as follows:

a) Within 120 days from the date on which the State bank grants an approval for conversion rules, the credit institution shall send a set of application for approval for consolidation prescribed in Clause 2 Article 18 of this Circular to the State bank directly or by post. After the above time limit, if the State bank does not receive the sufficient application required, the approval for acquisition rules shall become invalid.

Within 10 days from the date on which the above application is received, the State bank shall send the credit institution a document certifying the receipt of satisfactory application or requiring completion of the application;

b) Within 30 days from the day on which the satisfactory application is received, the State Bank shall grant a document approving conversion of business type of the credit institution, issuing an establishment and operation license of the credit institution, certifying registration of the charter and approving other contents (if any). If the application is rejected, the State bank must provide explanation in writing.

4. Within 45 days from the effective date of the approval for conversion of business type, the credit institution shall follow the procedures for enterprise registration as prescribed; the credit institution shall disclose information as prescribed in Clause 2 Article 8 of this Circular, hold an opening ceremony as prescribed and send a report on completion of conversion of business type to the State Bank.

5. Within 5 working days from the date on which the establishment and operation license of the converting credit institution become invalid, the converting credit institution must return such license to the State Bank.

Chapter IV

RESPONSIBILITIES OF RELEVANT UNITS

Article 21. Responsibilities of credit institutions

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2. President and members of the Board of Directors', President and members of the Board of members, legal representative(s) of credit institutions engaging in acquisition, consolidation or converting credit institutions must take responsibility for the sufficiency, accuracy, validity and lawfulness of the application for acquisition, consolidation or conversion of business type.

3. Each acquisition or consolidation contract of credit institutions engaging in acquisition or consolidation must be sent to creditors and employees within 15 days from the date on which the State Bank approves the rules of acquisition or consolidation of the credit institution.

4. Credit institutions engaging in acquisition or consolidation or converting credit institution shall, upon the receipt of an approval for rules of acquisition or consolidation, proactively prepare for the transfer and they shall, upon the receipt of an approval for acquisition, consolidation or conversion of business type, transfer all interests, obligations and organizational and operational matters.

5. If, after the restructuring, off-the-record issues or issues not being handed over are found, the President and members of the Board of Directors, President and members of the Board of members, legal representative(s) of credit institutions engaging in acquisition, consolidation or converting credit institutions must take legal responsibility.

6. The information confidentiality shall comply with Clause 3 Article 9 and Clause 3 Article 16 of this Circular.

7. Competent bodies of credit institutions engaging in acquisition or consolidation, post-acquisition credit institution or consolidated credit institution must ratify the restructuring with conditions, procedures and method of voting as prescribed in law and charter of the credit institutions.

Article 22. Responsibilities of affiliates of the State bank

1. The Chief Banking Inspector-Supervisor:

a) Take charge and cooperate with relevant departments of the State Bank, branches of the State Bank of provinces in requesting the Governor of the State bank to examine applications for acquisition, consolidation or conversion of business types of credit institutions.

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c) Submit the Governor of the State bank the following documents:

(i) Documents on approval or non-approval (with explanation) for rules of restructuring of credit institutions;

(ii) Documents approving restructuring of credit institutions; on amendments to establishment and operation licenses of post-acquisition credit institutions; issuance of establishment and operation licenses to consolidated credit institutions; issuance of establishment and operation licenses to converted credit institutions; on certification of charter registration, contents of modification to the charter of the after-restructuring credit institutions;

(iii) Decisions approving contents of modification as prescribed by law;

d) Inspect and take actions against violations committed by credit institutions in terms of their compliance with this Circular within their competence.

2. Department of Finance and Accounting:

Provide guidance on issues related to finance and accounting during the course of restructuring of credit institutions.

3. Legal Department:

Cooperate with the Bank Supervision and Inspection Agency in settlement of legal issues related to the process of restructuring of credit institutions.

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a) Send written consultation on the restructuring of credit institutions to the State Bank as prescribed in this Circular;

b) Inspect, supervise and take actions against violations committed by credit institutions in the province in terms of restructuring implementation as prescribed in regulations on functions, tasks, powers and organizational structure of branches of the State Bank of provinces.

5. Relevant departments of the State bank shall, according to its functions and duties, give written consultation at the request of Bank Supervision and Inspection Agency as prescribed in this Circular.

Chapter V

IMPLEMENTATION

Article 23. Transitional regulations

With regard to activities not satisfying operation requirements prescribed in Clause 2 or 3 Article 6 of this Circular, each post-acquisition credit institution or consolidated credit institution shall:

1. From the date on which the post-acquisition credit institution receives a certificate of enterprise registration or the consolidated credit institution holds its opening ceremony, it may not conclude new contracts or agreements to carry out the activities not satisfying operation requirements prescribed in Clause 2 or Clause 3 Article 6 of this Circular.

2. All contracts or agreements concluded between the post-acquisition or consolidation credit institution and their clients, in accordance with regulations of law at the time of concluding, before the date on which the post-acquisition credit institution receives a certificate of enterprise registration or the consolidated credit institution holds its opening ceremony shall keep valid until the expiry date of each contract or agreement.

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1. This Circular comes into force from March 1, 2016.

2. From the effective date of this Circular, the following provisions shall be annulled:

a) Clauses 1, 2, 4, 5 and 7 of Article 4; Clauses 1 and 2 of Article 6; Chapter II; Chapter III; regulations on acquisition and/or consolidation of credit institutions prescribed in Article 1 and Article 3 Clause 8 Article 4, Article 5, Article 7, Article 8, Article 21, Article 22, Article 23, Article 24 of Circular No. 04/2010/TT-NHNN dated February 11, 2010 of the Governor of the State Bank on merger, acquisition, consolidation of credit institution;

b) Clauses 17, 18 and 19 of Section VIII Part I of Circular No. 03/2007/TT-NHNN dated June 5, 2007 of the Governor of the State Bank on guidelines for Decree No. 22/2006/ND-CP dated February 28, 2006 of the Government on organization and operation of branches of foreign banks, joint-venture banks, wholly foreign-owned banks, representative offices of foreign credit institutions in Vietnam;

c) Clause 4 Article 4 of Circular No. 24/2011/TT-NHNN dated August 31, 2011 of the Governor of the State Bank on implementation of plan for simplifying administrative procedures in the field of establishment and operation of banks in accordance with resolutions of the Government simplifying administrative procedures in the fields under management scope of the State bank of Vietnam.

Article 25. Implementation

The Chief officers, the Chief Banking Inspector-Supervisor, heads of affiliates of the State Bank, Directors of the State Bank branches of provinces, President of the Board of Directors, President of the Member assembly, Director General (Director) of credit institutions shall implement this Circular.

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PP. GOVERNOR
DEPUTY GOVERNOR




Nguyen Kim Anh