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MINISTRY OF
FINANCE
OF VIETNAM
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THE SOCIALIST
REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
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No. 01/2017/TT-BTC
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Hanoi, January 5,
2017
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CIRCULAR
GUIDANCE
ON FINANCIAL REGIME APPLICABLE TO VIETNAM ASSET MANAGEMENT COMPANY
Pursuant to the Law on Enterprise No.
68/2014/QH13 dated November 26, 2014;
Pursuant to Decree No. 53/2013/ND-CP dated May
18, 2013, of the Government, on establishment, organization and operation of
Vietnam Asset Management Company;
Pursuant to Decree No. 34/2015/ND-CP dated March
31, 2015, of the Government, on amendments to Decree No. 53/2013/ND-CP dated
May 18, 2013, of the Government, on establishment, organization and operation
of Vietnam Asset Management Company;
Pursuant to Decree No. 18/2016/ND-CP dated March
18, 2016, of the Government, on amendments to Decree No. 53/2013/ND-CP dated
May 18, 2013, of the Government, on establishment, organization and operation
of Vietnam Asset Management Company;
Pursuant to Decree No. 91/2015/ND-CP dated
October 13, 2015, of the Government, on State capital investment in enterprises
and management and use of capital and assets in enterprises;
Pursuant to Decree No. 87/2015/ND-CP dated
October 6, 2015, of the Government, on supervision of State capital investment
in enterprises; financial supervision, performance evaluation and
classification, and financial reporting and disclosure of State-owned
enterprises and enterprises with State capital;
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At the proposal of the Director of the
Department of Finance for Banks and Financial Institutions;
The Minister of Finance promulgates the Circular
providing guidance on financial regime applicable to Vietnam Asset Management
Company.
Article 1. Scope and regulated
entities
1. This Circular provides guidance on financial regime
applicable to Vietnam Asset Management Company (hereinafter referred to as
VAMC).
2. The financial regime of VAMC shall be carried
out in accordance with Decree No. 53/2013/ND-CP dated May 18, 2013, of the
Government, on establishment, organization and operation of VAMC (hereinafter
referred to as Decree No. 53/2013/ND-CP); Decree No. 34/2015/ND-CP dated March
31, 2015, of the Government, on amendments to Decree No. 53/2013/ND-CP
(hereinafter referred to as Decree No. 34/2015/ND-CP); Decree No. 18/2016/ND-CP
dated March 18, 2016, of the Government, on amendments to Decree No.
53/2013/ND-CP (hereinafter referred to as Decree No. 18/2016/ND-CP), and
specific guidance provided in this Circular. For financial mechanism matters
not provided for in the above-mentioned Decrees, VAMC shall comply with laws
applicable to single-member limited liability companies wholly owned by the
State.
3. This Circular applies to VAMC, credit
institutions selling debts to VAMC, and related organizations and individuals.
Article 2. Operating capital of
VAMC
1. Owner’s investment capital comprises:
1.1 Charter capital of VND 2,000 billion.
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1.3 Other owner’s equity sources in accordance with
law applicable to single-member limited liability companies wholly owned by the
State.
2. Mobilized capital:
2.1 Bonds issued by VAMC for purchase of
non-performing loans at market value and special bonds issued by VAMC in
accordance with regulations of the State Bank of Vietnam.
2.2 Other mobilized capital sources in accordance
with law applicable to single-member limited liability companies wholly owned
by the State.
Article 3. Use of capital and
assets
1. VAMC shall be responsible for managing, using
and monitoring all existing assets and capital, and carry out accounting in
accordance with the current accounting regime; fully, accurately and promptly
reflect the status and changes of capital and assets during business
operations; determine responsibilities and handling measures applicable to each
division and individual in cases of damage to or loss of assets and funds of
VAMC.
2. VAMC may use operating capital to serve its
business operations in accordance with Decree No. 53/2013/ND-CP, Decree No.
34/2015/ND-CP, Decree No. 18/2016/ND-CP and other amending documents (if any),
specific guidance provided in this Circular and relevant laws, on the principle
of ensuring capital safety and development:
2.1 Special bonds shall only be used for purchase
of non-performing loans of credit institutions in accordance with Clause 1,
Article 7 of Decree No. 53/2013/ND-CP.
2.2 VAMC may use lawful capital sources of VAMC,
excluding special bonds specified in Clause 1, Article 7 of Decree No.
53/2013/ND-CP, to purchase non-performing loans at market value in accordance
with Clause 2, Article 7 of Decree No. 53/2013/ND-CP and Clause 5, Article 1 of
Decree No. 34/2015/ND-CP. Non-performing loans purchased by VAMC at market
value, when converted into contributed capital or share capital, shall be
determined as investments. VAMC shall monitor and account for such investments
in accordance with law.
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2.4 VAMC may only use capital for external
investment (not through purchase and sale of debts and assets) in the following
forms:
a) Depositing funds with commercial banks, ensuring
capital safety and efficiency;
b) Participating in capital contribution and share
purchase in accordance with Point g, Clause 1, Article 12 of Decree No.
53/2013/ND-CP.
2.5 Repair and upgrading of collateral from which
VAMC has recovered debts in accordance with Point d, Clause 1, Article 12 of
Decree No. 53/2013/ND-CP for the purpose of increasing value and facilitating
the enforcement of collateral for debt recovery.
2.6 VAMC may use capital to invest in and provide
financial support to borrowers in order to address temporary financial
difficulties and restore production and business activities in accordance with
Clause 3, Article 17 of Decree No. 53/2013/ND-CP.
2.7 VAMC shall carry out appropriation to risk
provisions and record such provisions as operating expenses in accordance with
Article 4 of this Circular.
3. Leasing of operating assets; management and use
of fixed assets; leasing, mortgaging and pledging of assets; contract
finalization and transfer of fixed assets of VAMC shall be carried out in
accordance with State regulations applicable to single-member limited liability
companies wholly owned by the State.
Article 4. Appropriation and
use of provisions
1. For NPLs purchased at market value, VAMC shall
carry out appropriation and use of provisions in accordance with regulations of
the State Bank of Vietnam.
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3. For provisions for inventory devaluation,
provisions for losses on financial investments, and provisions for doubtful
receivables (excluding receivables from credit institutions), VAMC shall carry
out appropriation and use of provisions in accordance with general regulations
applicable to enterprises.
Article 5. Management of
revenues and expenses of VAMC
1. The Members’ Council of VAMC shall be held accountable
to the State Bank of Vietnam and before law for organizing strict management
and ensuring the accuracy, truthfulness and legality of revenues and expenses
of VAMC.
2. All revenues and expenses arising from
operations of VAMC shall be supported by complete documents and vouchers in
accordance with law and fully recorded in the accounting books of VAMC.
3. Revenues and expenses of VAMC shall be
determined in Vietnamese dong; where revenues or expenses are incurred in
foreign currencies, they shall be converted into Vietnamese dong in accordance
with current law.
4. Recognition of revenues and expenses of VAMC
shall comply with the matching principle between revenues and expenses.
Article 6. Revenues
1. Revenue items of VAMC shall be carried out in accordance
with Clause 1, Article 23 of Decree No. 53/2013/ND-CP, Clause 13, Article 1 of
Decree No. 34/2015/ND-CP, and Clause 1, Article 1 of Decree No. 18/2016/ND-CP.
2. For revenues specified in Clause 1, Article 1 of
Decree No. 18/2016/ND-CP, VAMC shall carry out as follows:
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a) Annually, VAMC shall record as revenue an amount
calculated on the outstanding principal balance at the end of the period of
debts recorded on-balance sheet in the balance sheet of VAMC, at a rate
prescribed by the State Bank of Vietnam after agreement with the Ministry of
Finance.
b) The outstanding balance at the end of the period
of NPLs purchased with special bonds is the carrying amount of the outstanding
principal balance of the NPL at VAMC as at December 31 of the year in which the
revenue is determined, or as at the date of settlement of the special bond.
2.2 Revenues of VAMC from amounts recovered from
NPLs purchased with special bonds
a) VAMC shall record as revenue an amount
calculated on the recovered amount of NPLs purchased with special bonds at a
rate prescribed by the State Bank of Vietnam after agreement with the Ministry
of Finance, minus the amount already collected annually by VAMC calculated on
the outstanding principal balance at the end of the period of the same NPL as
specified in Item a, Point 2.1, Clause 2 of this Article.
Where such amount is smaller than the amount
already collected annually by VAMC as specified in Item a, Point 2.1, Clause 2
of this Article, VAMC shall not refund the amount already collected to the
credit institution.
b) Amounts recovered from NPLs purchased with
special bonds by VAMC are amounts collected by VAMC through implementation of
NPL resolution measures specified in Article 16 of Decree No. 53/2013/ND-CP and
Decree No. 34/2015/ND-CP.
3. Principles for revenue recognition
3.1 For revenues of VAMC calculated on the
outstanding principal balance at the end of the period of NPLs purchased with
special bonds, VAMC shall record income as at December 31 each year or at the
time of settlement of the special bond.
3.2 For revenues of VAMC from amounts recovered
from NPLs purchased with special bonds, VAMC shall record income no later than
the end of the month in which the debt is recovered.
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3.4 For revenues from capital contribution and
share purchase activities, revenue is the amount of profit distributed upon
issuance of a resolution or decision on distribution.
3.5 For revenues from other activities (including
revenues from consultancy, brokerage for purchase, sale and resolution of debts
and assets; revenues from leasing and utilization of assets; revenues from
financial activities; revenues from asset auction activities and other
revenues), revenue is the total amount accepted by customers for payment
regardless of whether payment has been received.
3.6 For receivables from credit institutions that
have been recorded as revenue but cannot be collected upon maturity, VAMC shall
record them as expenses and monitor them off-balance sheet for collection. Upon
collection, such amounts shall be recorded as operating revenue. Other
receivables shall be subject to appropriation of provisions by VAMC in
accordance with law applicable to enterprises.
Article 7. Expenses
1. Expense items of VAMC shall be carried out in
accordance with Clause 2, Article 23 of Decree No. 53/2013/ND-CP.
2. Principles for expense recognition
2.1 For expenses related to purchase of NPLs at
market value, expenses shall be recorded when income arises from resolution of
NPLs as follows:
a) Where an NPL is recovered in multiple
installments:
- Where revenue earned in the period from NPL
resolution (debt recovery from borrowers; sale of debts; utilization and sale
of collateral of the NPL) is greater than or equal to the cost of purchasing
the NPL, the entire cost of purchasing the NPL shall be transferred to expenses
in the period.
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Carry out transfer of part of the cost of
purchasing the NPL to expenses in the period at an amount equal to the actual amount
collected from resolution of the NPL.
Where the NPL continues to be recovered, the
remaining cost of purchasing the NPL shall continue to be transferred to
expenses in accordance with the above principle.
Where the final remaining portion of the NPL is
recovered, transfer the entire remaining cost of purchasing the NPL to expenses
in the period.
b) Where the NPL is recovered in a single recovery,
transfer the entire cost of purchasing such NPL to expenses in the period at
the time of recovery.
2.2 For expenses related to repair and upgrading of
assets:
a) For NPLs purchased at market value, VAMC may
record prepaid expenses (detailed for each NPL) corresponding to expenses for
repair and upgrading of assets. When the asset is sold, or the NPL associated
with the asset is recovered, or proceeds are collected from utilization of the
asset, the collected amount shall be recorded as revenue, and settlement of the
corresponding prepaid expenses for repair and upgrading of assets shall be
carried out in accordance with Clause 1 of this Article.
b) For NPLs purchased with special bonds, VAMC may
record prepaid expenses (detailed for each NPL) corresponding to expenses for
repair and upgrading of assets. When the asset is sold, or the NPL associated
with the asset is recovered, or proceeds are collected from utilization of the
asset, VAMC shall gradually settle the corresponding receivables equal to the
expenses incurred by VAMC for repair and upgrading of assets.
2.3 For other expenses (including debt collection
expenses; expenses for consultancy and brokerage for purchase, sale and
resolution of debts and assets; expenses for debt sale, share sale and transfer
of contributed capital; risk provision expenses; salary payments, bonuses and
allowances for officials and employees; asset auction expenses; corporate
management expenses; interest expenses on borrowings; asset-related expenses
and other expenses), VAMC shall only recognize as expenses amounts actually
incurred based on lawful and valid invoices and documents for each expense
item.
3. VAMC shall not include the following items as
expenses:
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3.2 Administrative fines payable by individuals in
accordance with law.
3.3 Expenses without valid supporting documents.
3.4 Expenses already recorded but not actually
paid.
3.5 Expenses covered by other funding sources.
3.6 Other unreasonable or invalid expenses.
Article 8. Profit distribution
and appropriation to funds
1. Profit of VAMC shall be determined as total
revenues arising in the period minus total reasonable expenses arising in the
period in accordance with regulations.
2. Profit distribution and appropriation to funds
of VAMC:
After offsetting losses of previous years and
fulfilling financial obligations to the State in accordance with law, the
remaining profit of VAMC shall be distributed in the following order:
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2.2 Appropriate to the reward fund and welfare fund
for employees of VAMC. Appropriation to the reward fund and welfare fund
for employees shall be carried out in accordance with law applicable to
single-member limited liability companies wholly owned by the State.
2.3 Appropriate to the reward fund for managers and
controllers of VAMC. Appropriation to the reward fund for managers and
controllers shall be carried out in accordance with law applicable to
single-member limited liability companies wholly owned by the State.
2.4 Where the remaining profit after appropriation
to the development investment fund as specified in Point 2.1 of this Clause is
insufficient to appropriate to the reward fund and welfare fund for employees
and the reward fund for managers and controllers of VAMC at the prescribed
levels, VAMC may reduce the portion appropriated to the development investment
fund to supplement sufficient sources for appropriation to such funds, provided
that the maximum reduction does not exceed the amount appropriated to the
development investment fund in the fiscal year.
2.5 The remaining profit, if any, after
appropriation in accordance with Points 2.1, 2.2, 2.3 and 2.4 of this Clause
shall be remitted to the State budget.
Article 9. Management and use
of funds
VAMC shall manage and use funds in accordance with
current State regulations applicable to single-member limited liability
companies wholly owned by the State.
Article 10. Financial plan,
financial supervision, performance evaluation and classification; accounting,
statistical and auditing regimes; financial reporting and disclosure
1. Financial plan, financial supervision,
performance evaluation and classification of VAMC shall be carried out in
accordance with current State regulations applicable to single-member limited
liability companies wholly owned by the State and provisions of this Circular
on specific characteristics of VAMC, specifically as follows:
1.1 VAMC shall prepare and submit the draft
financial plan to the State Bank of Vietnam and the Ministry of Finance before
March 1 of the planning year.
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1.3 Based on plan targets assigned by the State
Bank of Vietnam, the President of the Members’ Council of VAMC shall approve
the detailed financial plan for implementation.
2. VAMC shall organize accounting and statistical
work in accordance with current law; prepare and record original documents,
update accounting books, and ensure full, timely, truthful, accurate and
objective reflection of economic and financial activities.
3. The fiscal year of VAMC shall commence on
January 1 and end on December 31 of the calendar year.
4. At the end of each accounting period (quarter,
year), VAMC shall prepare, present and submit financial statements to the State
Bank of Vietnam and the Ministry of Finance in accordance with current law.
5. VAMC shall submit the annual financial
statements audited by the State Audit Office or an independent auditor,
together with the audit report, to the Ministry of Finance and the State Bank
of Vietnam, and concurrently publish such reports on the official website of
VAMC immediately after receipt of the audit report.
6. In addition to periodic financial and
statistical reports prepared and submitted in accordance with regulations, VAMC
shall prepare and submit ad hoc reports upon request of the State Bank of
Vietnam and regulatory agencies.
Article 11. Responsibilities
of management authorities
1. Responsibilities of the Ministry of Finance:
1.1 Perform the State management function over
finance in respect of VAMC in accordance with law;
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2. Responsibilities of the State Bank of Vietnam:
2.1 Perform the State management function over all
operations of VAMC in accordance with law. On a quarterly and annual basis (no
later than 30 days from the end of each quarter or year), the State Bank of Vietnam
shall notify the Ministry of Finance of the financial status of VAMC and
violations of the financial regime of VAMC detected during inspection,
examination and supervision activities (if any) in order to take timely
coordinated handling measures.
2.2 Perform the function of the State owner in
respect of VAMC:
a) Decide on, and be held accountable for, its
decisions within the competence of the State owner in accordance with law.
b) Take charge and cooperate with the Ministry of
Finance in submitting to the Prime Minister for consideration and decision
matters relating to finance beyond its competence.
c) Based on provisions of law and specific
characteristics of VAMC’s operations, issue guidance and carry out financial
supervision, performance evaluation and classification of VAMC, and submit to
the Ministry of Finance the financial supervision plan and reports on financial
supervision results in accordance with law applicable to State-owned
enterprises.
d) Take charge and cooperate with the Ministry of Finance
in submitting to the Prime Minister for decision changes in the charter capital
level of VAMC based on proposals of the Members’ Council of VAMC.
Article 12. Implementation
provisions
1. This Circular comes into force as of February
21, 2017, and applies from fiscal year 2016.
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3. During the course of implementation, if any
difficulties arise, they should be reported to the Ministry of Finance for
study, consideration and settlement./.
PP. FOR THE
MINISTER
DEPUTY MINISTER
Tran Van Hieu