SOCIALIST REPUBLIC OF VIETNAM
Independence- Freedom- Happiness
Hanoi, July 16, 2009
ON ORGANIZATION AND OPERATION OF COMMERCIAL BANKS
Pursuant to the December 25, 2001 Law on Organization of the Government;
Pursuant to December 12, 1997 Law No. 01/ 1997/QH10 on the State Bank of Vietnam, and June 17, 2003 Law No. 10/2003/QH11 Amending and Supplementing a Number of Articles of the Law on the State Bank of Vietnam;
Pursuant to December 12, 1997 Law No. 02/1997/QH10 on Credit Institutions, and June 15, 2004 Law No. 20/2004/QH11 Amending and Supplementing a Number of Articles of the Law on Credit Institutions;
Pursuant to December 29, 2005 Law No. 60/2005/QH11 on Enterprises;
At the proposal of the Governor of the State Bank of Vietnam,
Scope of regulation
This Decree provides for the organization and operation of commercial banks granted establishment and operation licenses by the State Bank of Vietnam (below referred to as the State Bank).
Subjects of application
1. Commercial banks, including:
a/ State-run commercial banks:
b/ Joint-stock commercial banks:
c/ Joint-venture commercial banks;
d/ Wholly foreign-owned commercial banks. (Below collectively referred to as banks).
2. Organizations and individuals involved in the organization and operation of banks.
Use of the term "bank"
Institutions other than credit ones are disallowed to use the term "bank" in their names and any extension thereof, documents, notices or advertisements since that term might mislead the public as to the fact that these institutions are banks.
Application of legal provisions
1. In case a treaty to which Vietnam has signed or acceded contains provisions different from those of this Decree on the organization and operation of commercial banks, the provisions of that treaty prevail.
2. For joint-venture commercial banks and wholly foreign-owned commercial banks, this Decree will apply to matters not governed by the Government's Decree No. 22/2006/ND-CP dated February 28, 2006, on organization and operation of branches of foreign banks, joint-venture banks and wholly foreign-owned banks, and representative offices of foreign credit institutions in Vietnam.
Interpretation of terms
In this Decree, the terms below are construed as follows:
1. Commercial bank means a bank licensed to conduct all banking operations and other related business activities for profit purposes under the Law on Credit Institutions and other provisions of law.
2. State-run commercial bank means a commercial bank of which the State owns more than 50% of the charter capital. State-run commercial banks include commercial banks with wholly state-owned charter capital and joint-stock commercial banks with more than 50% of charter capital owned by the State.
3. Joint-stock commercial bank means a commercial bank organized in the form of a joint-stock company.
4. Wholly foreign-owned commercial bank means a commercial bank established in Vietnam with 100% of its charter capital owned by foreign parties, including a foreign bank owning more than 50% of the charter capital (the holding bank). Wholly foreign-owned commercial banks must be established in the form of one-member limited liability companies or limited liability companies with two or more members, and have the Vietnamese legal entity status and Vietnam-based head offices.
5. Joint-venture commercial bank means a commercial bank established in Vietnam with capital contributed by a Vietnamese party (consisting of one or more than one Vietnamese bank) and a foreign party (consisting of one or more than one foreign bank) under a joint-venture contract. Joint-venture commercial banks must be established in the form of limited liability companies with two or more members, and have the Vietnamese legal entity status and Vietnam-based head offices.
6. Subsidiary of a commercial bank means an enterprise having the legal entity status and conducting the independent accounting with its own capital, in which the commercial bank:
a/ Owns more than 50% of that subsidiary's charter capital or total number of outstanding common shares; or,
b/ Has the right to directly or indirectly appoint a majority or all members of that subsidiary's Board of Directors. Director or Director General; or,
c/ Has the right to decide on amendment and supplementation of that subsidiary's charter.
7. Bank executive officers include the Director General, Deputy Directors General and holders of other executive posts as provided in the bank charter.
8. Bank managers include the Chairman and members of the Board of Directors, the Director General and holders of other managerial posts as provided in the bank charter.
9. Affiliated person means an organization or individual in relation to another organization or individual in any of the following cases:
a/ A holding company in relation to its subsidiaries and vice versa; a bank in relation to its subsidiaries and vice versa; subsidiaries of the same holding company; subsidiaries of the same bank;
b/ A company in relation to its managers and members of its Control Board or a person or organization competent to appoint these persons, and vice versa:
c/ A company in relation to individuals owning 10% or more of its charter capital, and vice versa;
d/ Persons with family bonds, including spouses, parents, adoptive parents, children, adopted children and blood siblings;
e/ A company in relation to persons having family bonds (as mentioned at Point d of this Clause) with managers, members of the Control Board, capital contributors or shareholders owning at least 10% of that company's charter capital, and vice versa;
f/ Individuals authorized to represent persons defined at Points a, b. c, d and e of this Clause in relation to their principals.
10. Independent member of the Board of Directors means a member of the Board of Directors who satisfies the criteria and conditions specified in Article 22 of this Decree.
11. Major share level means a level of share accounting for 5% or more of the voting equity capital of a bank.
12. Reorganization of a bank means split-up, separation, consolidation, merger, acquisition and transformation of the bank.
Representatives at law
1. The Chairman of the Board of Directors or the Director General is the representative at law of a bank as stated in the bank charter. The representative at law of a bank may authorize in writing another person under the mechanism of internal authorization formulated by the Board of Directors to perform his/her tasks and exercise his/her powers. Documents on authorization must clearly state the scope and duration of representation. Authorized representatives may only conduct transactions within the scope of representation.
2. Representatives at law of banks must reside in Vietnam. Those who are absent from Vietnam shall authorize in writing others who are residing in Vietnam under Clause 1 of this Article to perform their tasks and exercise their powers.
Mechanism of internal authorization and assignment
Banks shall formulate the mechanism of internal authorization and assignment within the Board of Directors and Control Board, and between the Director General and his/her assisting apparatus under this Decree and other regulations in order to assure the safe, effective and uninterrupted governance and management of banks.
Examination and inspection of banks
Banks are subject to examination and inspection by the State Bank under law.