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THE
STATE BANK
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SOCIALIST
REPUBLIC OF VIET NAM
Independence Freedom Happiness
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No. 731/2004/QD-NHNN
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Hanoi, June 15th,
2004
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DECISION
ON THE ISSUANCE OF THE TEMPORARY REGULATION ON THE OPERATION
LEASE OF FINANCE LEASING COMPANIES
THE GOVERNOR OF THE STATE BANK
- Upon the proposal of the Director of the
Banks and Non-bank Credit Institutions Department,
DECIDES:
Article 1. To issue in
conjunction with this Decision the temporary Regulation on the operation lease
of finance leasing companies.
Article 2. This Decision
shall be effective after 15 days from its publication in the Official Gazette.
Article 3. The Director
of Administrative Department, the Director of Banks and Non-Bank Credit
Institutions Department, Heads of units of the State Bank, General Managers of
the State Bank's branches in provinces, cities under the central Government's
management, Chairperson of the Board of Directors and General Directors
(Directors) of Finance Leasing Companies shall be responsible for the
implementation of this Decision.
FOR THE
GOVERNOR OF THE STATE BANK
DEPUTY GOVERNOR
Tran Minh Tuan
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ON THE
OPERATION LEASE OF FINANCE LEASING COMPANIES
(issued in conjunction with the Decision No. 731/2004/QD-NHNN dated 15 June,
2004 of the Governor of The State Bank)
Chapter I.
GENERAL
PROVISIONS
Article 1. Governing
Scope And Subjects
This Regulation Shall Govern The Operation Lease
Of Finance Leasing Companies, Which are granted with the establishment and
operation license in Vietnam by the State Bank.
Article 2. Definition
of operation lease
Operation lease is a form of assets lease
whereby the lessee shall use assets of the lessor for a certain duration and be
obliged to return those assets to the lessor at the end of the assets lease
term. The lessor shall assume its ownership over leased assets and be entitled
to receive lease payment in accordance with leasing contract.
Article 3. Criteria
for determination of operation lease transactions
A lease transaction shall be determined as the
operation lease transaction whenever:
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3.2. The leasing contract does not provide for
the agreement on the purchase of the leased assets between the lessee and
lessor.
3.3. The leasing term accounts for only one part
of the useful lifetime of the leased assets
3.4. The total value of leasing amount accounts
for only one part of the value of the leased assets.
Article 4.
Interpretation
Terms stated in this Regulation shall be
construed as follows:
4.1. Lease payment shall be the amount
periodically paid by the lessee to the lessor as agreed in the leasing
contract.
4.2. Leased assets shall be the assets
permitted for operation lease, including machines, equipment, transport means
and other movable assets.
4.3. Lessor shall be finance leasing
companies permitted to establish and operate in Vietnam
4.4. Lessee shall be organizations,
individuals being operating in Vietnam, including:
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b. Other organizations being borrowing subjects
of Credit institutions;
c. Family households;
d. Individuals.
4.5. Supplier shall be organizations,
which, individuals, who supply assets for operation lease to the lessor;
4.6. Leasing term shall be the duration
during which the lessee uses the leased assets and make lease payments as
agreed upon by the lessor and the lessee in the leasing contract.
Article 5. Agency, which
approves the operation lease
Finance leasing companies permitted to establish
and operate in Vietnam, which wants to carry out the operation lease, shall be
accepted in writing by the State Bank
Chapter II
OPERATION
LEASE ACTIVITY
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Article 6. Conditions
for operation lease approval
Finance leasing companies, which wish to perform
the operation lease, should satisfy following conditions:
6.1. There is a demand for the operation lease;
6.2. Having operated for at least 2 years from
the date of their official opening for business;
6.3. Their business is profitable, ratio of
overdue debt at the time prior to the previous quarter is less than 5%, they do
not violate prudential provisions;
6.4. They must ensure conditions of material
foundation for the operation lease activity, such as: warehouse, maintenance
for leased assets
Article 7. Application
file for the operation lease
The file applying for the approval of the State
Bank for the operation lease of finance leasing companies shall include:
7.1. Written application letter of the Chairman
of the Board of Directors of the company or of the authorized person, which
requests the State Bank to approve the operation lease of the finance leasing
company. In respect of an authorization, a written authorization of the
Chairman of the Board of Directors is required;
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7.3. A financial statement of the finance
company in the most recent 2 years enclosed with the auditing report of an
independent auditing organization. These documents must be original, in case of
copy, they must be confirmed by the agency that grants those originals or certified
by the State Notary Agency.
Article 8. Sequences and
procedures for the approval of the operation lease
The sequences and procedures of the application
for the State Bank's approval of the operation lease of the finance leasing
company:
8.1. The joint stock finance leasing company
shall submit 2 sets of application files for the operation lease to the State
Bank's branch in province, city where its Head office is located.
Within a maximum period of 15 working days from
the full receipt of file, the State Bank's branch in province, city shall
consider and give their written opinion on the conditions, application file for
the operation lease in accordance with provisions in Article 6 and Article 7 of
this Regulation and send it to the State Bank (Banks and Non-bank Credit
Institutions Department) enclosed with 1 set of the application file of the
joint stock finance leasing company.
8.2. The State owned Finance leasing companies,
finance leasing companies, which are a subsidiary of a credit institution,
joint venture finance leasing companies and finance leasing companies with 100%
foreign invested capital shall submit two sets of application files for the
operation lease to the State Bank (Banks and Non-bank Credit Institutions
Department).
8.3. Within a maximum period of 30 working days
from the full receipt of files from the State Finance leasing companies,
finance leasing, which are a subsidiary of a credit institution, joint venture
finance leasing companies and finance leasing companies with 100% foreign
invested capital, 15 working days from the full receipt of files of joint stock
finance leasing companies which are sent by the State Bank branches in
provinces, cities, the State Bank shall consider and approve or refuse to
approve, in writing, the operation lease of applying companies. In case of
non-approval, the State Bank shall clearly state the reasons thereof in
writing.
Article 9. Conditions
for carrying out the operation lease
9.1. Finance leasing company shall, prior to the
performance of the operation lease, register with the business registration
agency and publish in the central, local paper in 3 consecutive issues in
Vietnamese in accordance with provisions of current laws.
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Section 2. PROVISIONS ON THE
OPERATION LEASE
Article 10. Provisions
on the currency used in the operation lease transactions
10.1 The operation lease transactions of the
finance leasing companies shall be made in VND
10.2 In respect of the operation lease
transactions made in foreign currency, finance leasing companies shall comply
with current provisions on foreign exchange control as for the case of finance
leasing transactions made in foreign currency.
Article 11. Provisions
on the period of lease payment, rescheduling of lease payment and overdue debt
classification in the operation lease
Provisions on the period of lease payment,
rescheduling of lease payment and overdue debt classification in the operation
lease shall be applied as for the case of finance leasing transactions.
Article 12. Provisions
on accounting
12.1. Leased assets shall belong to the ownership
of the lessor and recorded as assets in the balance sheet of the lessor.
12.2. Leased asset shall not be considered an
asset in the balance sheet of the lessee.
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12.4. The lease payment shall be considered as
an income of the lessor and the operating cost of the lessee.
12.5. The accounting for the operation lease
shall be made in accordance with the guidance of the State Bank.
Article 13. Provisions
on tax
Provisions on tax applicable to the operation
lease shall be applicable in accordance with current provisions and guidance of
the Ministry of Finance.
Article 14. Prudential
provision
14.1. The activity of operation lease must
ensure to comply with provisions on the prudence stated in the Law on Credit
Institutions and guiding documents of the State Bank
14.2. The total value of assets used for the
operation lease to a single customer shall not be in excess of 30% of the own
capital of a finance leasing company.
14.3. The total value of assets used for the
operation lease shall not be in excess of 5 times of the own capital of the
finance leasing company
Chapter III.
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Article 15. The rights
of the lessor
The lessor shall have following rights:
15.1 To request the lessee to fully, timely
provide with annual, quarterly reports on the performance of the finance,
business and production activity and all matter concerning the leased assets;
15.2. To examine the management and use or
leased assets;
15.3. To affix the ownership stamps on leased
assets;
15.4. To request the lessee to compensate for
all damages resulting from his violation of the leasing contract;
15.5. To assign his rights and obligations
stated in the leasing contract to another finance leasing company which is
permitted to engage in the operation lease activity. In this case, the lessor
shall give written notice to the lessee before the assignment.
15.6. To request the lessee to place money as
deposit or have the guarantee by the third party's assets for the performance
of the leasing contract if it is agreed upon by the parties.
15.7. To exempt from, reduce, extend the period
of lease payment and sell leased assets.
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Article 16. Obligations
of the lessor
The lessor shall have following obligations:
16.1. To enter into the contract on the purchase
of leased assets with the supplier;
16.2. To purchase, or directly import leased
assets if it is necessary for the lessor or upon the requirement of the lessee;
16.3. To register the ownership, complete
procedures of insurance for leased assets
16.4. To ensure that the leased assets are
maintained and repaired within the leasing term;
16.5. To fully and correctly comply with
agreements undertaken in the leasing contract.
Article 17. Rights of
the lessee
The lessee shall have following rights:
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17.2. To directly receive the leased assets from
the lessor or a representative authorized by the lessor in accordance with the
agreements stated in the leasing contract.
17.3. To request the lessor to compensate for
damages resulting from his breach of leasing contract.
Article 18. Obligations
of the lessee
18.1 To take responsibility for his selection,
negotiation and agreements stipulated in paragraph 1, Article 17 of this
Regulation;
18.2. To use leased assets for the right
purposes as agreed in the leasing contracts; not to be permitted to transfer
the right to use leased assets to other individuals, organizations within the
effective term of the leasing contract if it is not accepted by the lessor in
writing;
18.3. To fully provide reports on the
performance of the finance, business production activity and other matters
relating to the leased assets upon the request of the lessor; to ensure the
honesty, accuracy of information, data so provided; to facilitate the lessor to
examine the leased assets;
18.4. To make lease payment in accordance with
provisions stated in the leasing contract;
18.5 To return the leased assets to the lessor
upon the expiry of the leasing contract;
18.6. To accept all risks relating to the loss,
damage of leased assets caused by his fault and take responsibility for all
consequences the leased assets cause to other organizations, individuals during
the use of leased assets;
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18.8. Not to be permitted to use leased assets
to pledge, mortgage or secure for any obligation; and not to be permitted to
use leased assets as a payment to other creditors;
18.9. To fully and correctly comply with
agreements undertaken in the leasing contract;
18.10. To well preserve the leased assets,
strictly comply with the technical procedures; to be responsible for repairing
or replacing lost, damaged parts in accordance with the quality, technical
standards of leased assets
Chapter IV.
THE
OPERATION LEASE CONTRACT
Article 19. Leasing
contract
19.1. The contract of the operation lease shall
be a type of assets leasing contract entered into between the lessor and the
lessee on the leasing of one or several leased assets in accordance with the
provisions in the Article 4 paragraph 4.2 of this Regulation, in line with the
rights and obligations of related parties. The leasing contract shall be
effective from the date agreed upon by the two parties in the leasing contract.
19.2. The leasing contract must clearly provide
for the settlement in case where the leasing contract is terminated prior to
the term.
19.3. The parties shall not be entitled to
unilaterally cancel the leasing contract (except for the case, which is
stipulated in the Article 20 of this Regulation).
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20.1. The lessor shall have the right to
terminate the leasing contract prior to its expiry date in one of following
cases:
a. The lessee fails to make the lease payment in
accordance with provisions in the leasing contract;
b. The lessee violates several agreements stated
in the leasing contract;
c. The lessee goes bankrupt or is dissolved;
d. The guarantor of the lessee goes bankrupt and
the lessor does not accept the request by the lessee for guarantee termination
or the request for the acceptance of another guarantor;
20.2. The lessee shall have the right to
terminate the leasing contract prior to its expiry date when the lessor
violates one of following cases:
a. The lessor fails to deliver the leased assets
to the lessee in due course due to the lessor's fault
b. The lessor breaches the leasing contract;
20.3. The leasing contract shall be terminated
prior to its expiry date in following cases:
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b. The parties agree and terminate the leasing
contract prior to its expiry date
20.4. The leasing contract shall be terminated
prior to its expiry date in case where the lessor accepts that the lessee makes
the entire lease payment prior to the leasing term stated in the leasing
contract and hand over the leased assets to the lessor
Article 21. Dealing
with the leasing contract which is terminated prior to its expiry date
21.1. In case where the lessee violates point a,
b paragraph 20.1 of Article 20:
a. The lessor shall have the right to repossess
the leased assets and request the lessee to immediately make the entire lease
payment, which he does not yet pay under the leasing contract;
b. The lessor shall be entitled to deal with the
leased assets by leasing them to other party or transfer of the leased assets.
c. The leesee shall be obliged to make the
payment of the unpaid lease payment pending transfer or leasing of leased
assets by the lessor to another party.
21.2 The dealing with the leasing contract,
which is terminated prior to its expiry date due to the lessee being bankrupt,
dissolved, shall be performed in accordance with provisions of applicable laws
on bankruptcy and dissolution.
Chapter V.
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Article 22.
Organization of implementation
1. Responsibilities of the finance leasing
companies:
Based on this Regulation and applicable
provisions of related legal documents, finance leasing companies shall issue
specific guiding documents on the operation of the operation lease in line with
their conditions, characteristics and Charter.
2. Responsibilities of units of the State Bank:
a. The Banks and Non-bank Credit Institutions
Department, the State Bank's branches in provinces, cities shall:
- Receive the application file for the
performance of the operation lease of finance leasing companies in accordance
with sequences and procedures stipulated in Chapter II, section 1 of this
Regulation.
- Coordinate with related Departments of the
State Bank to consider and submit to the State Bank's Governor for his decision
on the approval of the operation lease by finance leasing companies.
b. The State Bank Inspectors shall:
- Coordinate with and provide the Banks
Department with the performance of finance leasing companies to submit to the
State Bank's Governor for his consideration and decision on the approval of the
operation lease by finance leasing companies.
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c. The Monetary and Policy Department shall:
Provide for the periodical reporting regime on
the operation lease to the competent unit of the State Bank
d. The Finance - Accounting Department shall
provide guidance on the accounting of the operation lease of finance leasing
companies.
Article 23. The amendment,
supplement of this Regulation shall be decided upon by the State Bank's
Governor.
FOR THE GOVERNOR OF THE STATE
BANK
DEPUTY GOVERNOR
Tran Minh Tuan