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THE GOVERNMENT
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SOCIALIST
REPUBLIC OF VIETNAM Independence
- Freedom - Happiness
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No. 65/2005/ND-CP
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Hanoi, May 19th, 2005
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DECREE
ON
AMENDMENT OF AND ADDITION TO A NUMBER OF ARTICLES OF DECREE 16-2001-ND-CP OF
THE GOVERNMENT DATED 2 MAY 2001 ON ORGANIZATION AND OPERATION OF FINANCE
LEASING COMPANIES
THE GOVERNMENT
Pursuant to the Law on Organization of the Government dated 25 December 2001;
Pursuant to the Law on the State Bank of Vietnam
01-1997-QH10 dated 12 December
1997
as amended by Law 10-2003-QH11 dated
17 June 2003;
Pursuant to the Law on Credit Institutions 02-1997-QH10 dated 12 December 1997
as amended by Law 20-2004-QH11 dated 15 June 2004;
On the proposal
of the Governor of the State
Bank of Vietnam:
DECREES:
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1. To amend article 1.2 as follows:
"A
finance leasing transaction must satisfy one of
the following conditions:
(a) Upon expiry of the lease duration
under the contract, ownership of the leased assets is transferred to the lessee
or the lessee continues to lease the
assets as agreed by the two parties;
(b) Upon expiry of the lease duration
under the contract, the lessee has the preferential right to purchase the
leased assets at a par price less than the actual value at the time of
[such] acquisition;
(c) The lease duration of each leased asset must
be at least sixty (60) per cent of the
period required for amortization of the leased asset;
(d) The total lease payments for each
asset set out in the finance
leasing contract must be at least
equivalent to the value of such asset
at the time of signing of the contract1."
2. To add the following
clauses 4 and 5 to article 7:
"4. Lease payments are the purchase
price of the leased assets plus reasonable leasing fees and interest
which the lessee must pay to the lessor in accordance with the
leasing contract.
5. Operational leasing is a form of leasing assets under which
the lessee uses the leased assets of the lessor for a fixed duration returns such assets to the lessor upon expiry of the lease duration. The lessor retains
ownership of the leased assets and receives lease payments in accordance with a leasing
contract."
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"A
finance leasing company
to which the State
Bank issues an establishment and perating licence shall be liable to
pay a fee in accordance with the provisions of
the law on fees and charges."
4. To add the following
paragraph to clause 3 of article 16:
"The Ministry of Finance shall
provide guidelines on payment of tax pursuant to the tax laws by finance leasing companies applicable to purchase-and-lease-back in the form of
finance leasing."
5. To add the following
clauses 7 and 8 to article 16:
"7. Provide operational leasing services
in accordance with regulations of the State Bank.
8. Sell items receivable from finance leasing contracts to organizations and individuals in accordance with regulations of the State Bank."
6. To amend article 19 as follows:
"All
finance leasing transactions must be registered at the centre for registration of security transactions. The Ministry of Justice shall provide
detailed guidelines on registration of finance leasing transactions and on the
legal validity of such registration.
If finance leased assets the subject of a registered security transaction are seized by a
competent State body due to a breach of law by the lessee,
the finance leasing
company shall be entitled to receive back the leased assets in order to continue to lease them. The
lessee shall bear all responsibility for breach of law during the process of use of the
assets."
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"A
finance leasing company
shall register ownership
of leased assets at the competent body in the place where the finance leasing company has its head office or branch or in the place where the lessee resides or has
its operational office. The Ministry
of Police, the Ministry of Justice and the Ministry
of Transport and Communications shall be responsible to provide guidelines on implementation of this provision."
8. To amend article 23.7 as follows:
"7. To reduce lease interest
payments, to extend or amend the time-limit
for lease payments, or to transfer debts being overdue lease payments in accordance with the regulations of the State Bank."
9. To amend article 28.1 as follows:
"In the event of a finance leasing contract
being terminated prior to
its expiry in any of the
circumstances stipulated in article 27.1 of
Decree No. 16-2001-ND-CP of the Government dated 2 May 2001 on organization and
operation of finance leasing companies, the lessee shall pay
immediately all outstanding lease payments. If the lessee fails to pay the
lease payments then the finance leasing
company shall deal with the leased assets as follows:
(a) The finance leasing company shall have the
right to recover the leased assets
immediately without waiting
for a court decision and to require the lessee to pay immediately all lease payments
remaining unpaid under the contract. It shall be strictly prohibited to
detain, withhold or use leased assets without
returning them to the lessor;
(b) Within a time-limit of sixty (60) days after the date of recovery
of leased assets, the lessor must complete
realization of the
leased assets. The proceeds collected
from
realization of leased assets shall be used
to pay items remaining unpaid by the
lessee plus the expenses arising
during the process of realization of the leased assets. If the proceeds
collected are insufficient to pay out
these items, then the lessee shall be
liable to pay the deficit to the lessor;
(c) Where the lessee pays part of the payable lease payments and on realization of the leased assets the lessor collects proceeds
in excess of the lease
payments due under the contract plus expenses
arising during the process
of realization of the leased assets, the lessor must repay such excess to the lessee;
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(dd) Within a time-limit of thirty
(30) days from the date of receipt of a
request to return leased assets to
the lessor, the lessee shall be responsible to return the leased assets to
the lessor;
(e) The State Bank of Vietnam, the Ministry of Police, the Ministry of Justice and relevant local authorities are assigned the task of guiding finance
leasing companies to recover and realize leased assets."
10. To amend article 37 as follows:
"A
finance leasing company
may not purchase or invest
in fixed assets the value of which exceeds fifty (50) per cent of its equity.
Assets used for finance
leasing and for operational leasing shall not be included when calculating the fixed assets to which the above provision applies."
11. To add the following
clause 3 to article 39:
"3. A foreign credit institution [owning]
a one hundred (100) per cent foreign
owned finance leasing company shall conduct
inspections of internal
operations of the (100) per cent foreign owned finance leasing company
in Vietnam.
Prior to conducting an internal inspection, a foreign credit
institution shall provide written
notice to the State Bank of
the matters to be inspected and of the times for commencing
and finishing the inspection. Within a time-limit of thirty (30) days from the date of finishing
an internal inspection of a (100) per cent foreign owned finance leasing company in Vietnam, the foreign credit institution shall forward
a report on the results of the inspection to the State Bank."
Article 2
The expressions "the
total value of the assets leased" in article 30.2 and "the
total amount of finance
leasing" in article
31.2(a) shall be changed to "the total balance of outstanding finance leasing".
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1. This Decree shall be of full force and effect
after fifteen (15) days from the date of its proclamation in the Official
Gazette.
2. The State Bank and relevant ministries and branches shall be
responsible to provide guidelines for the implementation of this Decree.
3. Ministers, heads of ministerial
equivalent bodies, heads of Government bodies and chairmen of
peoples committees of provinces and cities under central authority shall
be responsible for the implementation of this Decree.
FOR THE GOVERNMENT
PRIME MINISTER
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Phan Van Khai