DECREE

ON FOREIGN INVESTORS' PURCHASE OF SHARES OF VIETNAMESE CREDIT INSTITUTIONS

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the June 16, 2010 Law on the State bank of Vietnam;

Pursuant to the June 16, 2010 Law on credit institutions;

Pursuant to the November 29, 2005 Law on enterprises;

Pursuant to the June 29, 2006 Law on securities and the November 24, 2010 Law amending and supplementing a number of articles of the securities Law;

At the proposal of the Governor of the State bank of Vietnam;

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Chapter 1.

GENERAL PROVISIONS

Article 1. Scope of regulation

This Decree provides for conditions of and procedures for share purchase, total of maximum shareholding level for foreign investors, the maximum holding of a foreign investor in a Vietnamese credit institution; conditions for a Vietnamese credit institution to sell shares to foreign investors.

Article 2. Subjects of application

1. Joint-stock credit institutions and credit institutions transforming the legal form into joint-stock credit institutions (abbreviated to as Vietnamese credit institutions).

2. Foreign investors.

3. Other organizations and individuals involving foreign investors' purchase of shares of Vietnamese credit institutions.

Article 3. Interpretation of terms

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1. Joint-stock credit institutions mean credit institutions which are established and organized under form of joint-stock companies, including: Joint-stock commercial banks, Joint-stock financial companies, Joint-stock finance-leasing companies.

2. Credit institutions transforming the legal form into joint-stock credit institutions mean credit institutions which are performing transformation of legal form from credit institutions operating in form of limited liability companies into credit institutions operating in form of joint-stock companies.

3. Foreign investors include foreign organizations and individuals.

4. Foreign organizations include:

a) Organizations which are set up and operate under foreign law and branches of these organizations in foreign countries or/and in Vietnam.

b) Organizations, closed funds, member funds, companies of securities investment which are set up and operate in Vietnam with rate of contributed capital amount of foreign parties more than 49%.

5. Foreign individuals are persons who do not bear Vietnamese nationality.

6. Foreign strategic investor means a foreign organization which has financial capacity and has a written commitment of competent person to bind its long-term benefit with Vietnamese credit institutions and support Vietnamese credit institutions in transferring modern technologies; developing banking products and services, raising the administration and financial capacity.

7. Shareholding includes direct and indirect shareholding.

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Currency used in foreign investors’ share purchase and sale transactions in Vietnamese banks is Vietnam dong.

Article 5. Participation in administration at Vietnamese credit institutions

1. The participation and appointment of representative for contributed capital amount to participate in a Vietnamese credit institution shall comply with provisions of Law on credit institutions and relevant laws.

2. Foreign investors are only allowed to participate or appoint representative for the contributed capital amount to participate in Managing Board at a Vietnamese credit institution, except for the following cases:

a) Foreign investors participate or appoint representative for the contributed capital amount to participate in Managing Board of other credit institution being subsidiary company of Vietnamese credit institution of which foreign investors participated or appointed representative for the contributed capital amounts to participate in Managing Board.

b) Foreign investors participate or appoint representative for the contributed capital amount to participate in Managing Board at a weak joint-stock credit institution in order to restructure it under the plan already been accepted by the State bank of Vietnam.

Chapter 2.

SPECIFIC PROVISIONS

SECTION 1. FORM, PERCENTAGE OF AND PROCEDURES FOR SHARE PURCHASE

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1. Foreign investors purchase shares of shareholders of joint-stock credit institutions.

2. Foreign investors purchase shares in case where joint-stock credit institutions sell shares to increase charter capital or sell treasury shares.

3. Foreign investors purchase shares in case where credit institutions transform the legal form into joint-stock credit institutions.

Article 7. Holdings of foreign investors

1. The holding of a foreign individual shall not exceed 5% of charter capital of a Vietnamese credit institution.

2. The holding of a foreign organization shall not exceed 15% of charter capital of a Vietnamese credit institution except for the case specified at Clause 3 this Article.

3. The holding of a foreign strategic investor shall not exceed 20% of charter capital of a Vietnamese credit institution.

4. The holding of a foreign investor and the concerned persons of such foreign investor shall not exceed 20% of charter capital of a Vietnamese credit institution.

5. Total shareholding level of foreign investors shall not exceed 30% of charter capital of a Vietnamese commercial bank. Total shareholding level of foreign investors at a Vietnamese non-banking credit institution shall comply with legislation applicable to public companies and listing companies.

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7. The holdings specified at Clauses 1, 2, 3, 4, 5, 6 this Clause include the capital amount which foreign investor entrusted for other organizations and individuals to purchase shares.

8. Foreign investors changing convertible bonds of Vietnamese credit institutions into stocks must adhere to the holdings and holding conditions prescribed in this Decree.

Article 8. Competence, orders, procedures and dossier in case of foreign investors' purchase of shares of Vietnamese credit institutions

1. Case of share purchase that leads the shareholding level to be 10% or more of charter capital; share purchase and becoming foreign strategic investor of a Vietnamese credit institution:

a) The Vietnamese credit institution (for credit institution which has not yet listed its shares) or foreign organization (for credit institution which has listed its shares) shall make a dossier and send directly or via post, electronic network to the State bank of Vietnam for acceptance before performing transactions.

b) Within 40 days after receiving full and valid dossier, based on conditions specified in Articles 9 and 10 of this Decree, the State bank of Vietnam shall consider and decide on acceptance or refusal in writing for foreign organizations' share purchase. In case of refusal, the State bank of Vietnam shall state clearly reason thereof.

2. In case of share purchase that leads the shareholding level to be 5% or more of charter capital and additional share purchase when a foreign organization has owned 5% or more of charter capital of a Vietnamese credit institution except for case specified at Clause 1 this Article, foreign investors shall comply with the process and procedures specified at Clause 2 Article 29 of Law on credit institutions.

3. Other cases of share purchase, except for cases specified in Clauses 1 and 2 this Article:

a) Foreign investors purchase shares of Vietnamese credit institutions which have not yet listed shares shall make dossier and send it, directly or via post, to the Vietnamese credit institutions for decision in order to ensure compliance with Article 7 of this Decree

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Within 20 working days, after receiving a full and valid dossier, the Vietnamese credit institutions must reply in writing to foreign investors. In case of refusal, the Vietnamese credit institutions must state clearly reason thereof.

b) Foreign investors may purchase shares of joint-stock credit institutions which have listed shares in accordance with legislations on securities and securities market and must comply with provision in Article 7 of this Decree.

4. The State bank of Vietnam shall certify the process of, procedures for and dossier of foreign investors’ purchase of shares of Vietnamese credit institutions specified at Clauses 1, 2 this Article.

SECTION 2. CONDITIONS FOR SHAREHOLDING

Article 9. Conditions for a foreign organization to purchase shares that lead the shareholding level to be 10% or more of charter capital of a Vietnamese credit institution

1. Being ranked by international prestige credit-rating organizations from the stable level or equivalent or higher level.

2. Having full financial source to purchase share which is defined under financial statement audited independently of year preceding year of submission of dossier and a lawful capital source for share purchase as prescribed by law.

3. The share purchase does not cause influence to the safety, stability of the Vietnamese credit institution system; does not create the exclusivity or limit the competition in the Vietnamese credit institution system.

4. Not violating seriously law on monetary, banking, securities and securities market of country where foreign investor is headquartered and law of Vietnam within 12 months until submission of dossier of share purchase.

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Article 10. Conditions for foreign organizations to purchase shares and become foreign strategic investors

1. Conditions specified at Clauses 1, 2, 3, 4 Article 9 of this Decree.

2. Being foreign banks, foreign financial companies, foreign finance-leasing companies which are allowed to perform the banking activities as prescribed by law of countries where they are headquartered. Foreign financial companies are only allowed to be the strategic investors at Vietnamese financial companies. Foreign financial companies are only allowed to be the strategic investors at Vietnamese finance-leasing companies.

3. Having experiences in international operation of banking and finance from 5 years or longer.

4. Having minimum total assets of 20 billion U.S Dollar in the year preceding the year of submission of dossier of share purchase.

5. Having written commitment and clear plan on binding long-term benefit with Vietnamese credit institutions and support Vietnamese credit institutions in applying modern technologies; developing banking products and services, raising the administration and financial capacity.

6. Not owning 10% or more of charter capital at any other credit institution in Vietnam;

7. Committing or having owned 10% or more of charter capital of Vietnamese credit institutions where foreign organizations request for purchasing shares and becoming the foreign strategic investor.

SECTION 3. VIETNAMESE CREDIT INSTITUTIONS THAT SELL SHARES

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1. Credit institutions transforming legal form into the joint-stock credit institutions must have plan on equitization, plan on transformation which are approved by competent authorities as prescribed by law, in which includes plan on share sale for foreign investors.

2. The joint-stock credit institutions must have plan on increasing charter capital, plan on selling treasury stocks already approved by General Council of Shareholders, in which includes plan on share sale for foreign investors.

For joint-stock credit institutions with the state ownership rate of over 50% of charter capital, plan on increasing charter capital, plan on selling treasury stocks shall comply with legislations on financial management of state enterprises before submitting to General Council of Shareholders for approval.

Article 12. Share selling price for foreign investors

1. The selling prices of shares of an unlisted Vietnamese credit institution to foreign investors shall be determined through auction or agreement form.

2. The selling prices of shares of a listed joint-stock credit institution to foreign investors shall comply with legislations on securities and securities market.

3. Foreign investors and Vietnamese credit institutions shall agree on making a deposit for performing transaction of share purchase in accordance with law.

SECTION 4. RIGHTS AND OBLIGATIONS OF FOREIGN INVESTORS

Article 13. Rights of foreign investors

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2. To transfer incomes from investment, share purchase, revenues from transfer of shares into other countries after having fulfilled financial obligations as prescribed by Vietnamese law.

3. To participate in or appoint representative to participate in the Managing Board, Control Board, executive persons of joint-stock credit institutions as prescribed in Charter of joint-stock credit institutions where foreign investors have purchased shares and Vietnamese law.

4. To have other lawful rights and interests protected by the State of the Socialist Republic of Vietnam in accordance with Vietnamese law and International treaties to which Vietnam is a contracting party.

Article 14. Obligations of foreign investors

1. To fulfill obligations of shareholders in accordance with Vietnamese law and the charters of the Vietnamese credit institutions where they purchase shares and agreements in conformity with Vietnamese law in contracts of share purchase and sale between foreign investors and Vietnamese credit institutions.

2. To ensure and take responsibility for the lawfulness of capital sources used for share purchase and the validity of dossiers of application for share purchase and the accuracy of the supplied information and documents in accordance with Vietnamese law.

3. To report full information and take responsibilities for the accuracy of information about their concerned persons who hold shares, information about shareholding through their concerned persons and though investment entrustment at Vietnamese credit institutions where the foreign investors participate in share purchase.

4. To fully transfer the amount of capital already registered for the purchase of shares of Vietnamese credit institutions under agreements in contract of share purchase and sale between foreign investors and Vietnamese credit institutions and in conformity with law.

5. A foreign strategic investor is not permitted to transfer shares owned by it at Vietnamese credit institutions for other organizations or individuals within at least 5 years after becoming strategic investor of Vietnamese credit institution as stated in written acceptance of the State bank of Vietnam.

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7. Foreign investors purchasing shares of the weak and restructured joint-stock credit institutions as prescribed at Clause 6 Article 7 of this Decree must formulate plan on share purchase and restructure of the weak credit institutions and send them to the State bank of Vietnam for consideration, appraisal and submission to the Prime Minister for decision.

8. To abide by current regulations on foreign exchange management of Vietnam.

Chapter 3.

ORGANIZATION OF IMPLMENTATION

Article 15. Responsibilities of the State management agencies

1. The State bank of Vietnam shall:

a) Guide implementation and inspect, examine, supervise implementation of this Decree;

b) Supply information related to the share purchase and sale of foreign investors within its management to the Ministry of Finance for coordinative management as prescribed in this Decree.

2. The Ministry of Finance shall:

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b) Supply information related to the share purchase and sale of foreign investors within its management to the State bank of Vietnam for coordinative management as prescribed in this Decree.

Article 16. Responsibilities of Vietnamese credit institutions

1. Organize the share sale in accordance with this Decree and relevant law.

2. Announce information as prescribed by law.

3. Report fully and timely to competent agencies about information involving the foreign investors’ share purchase.

Article 17. Handling of violation

All violations of provisions in this Decree shall be handled as prescribed in Decree on sanctioning commit violations in monetary and banking operation.

Article 18. Effect

This Decree takes effect on February 20, 2014 and replaces Government’s Decree No. 69/2007/ND-CP dated April 20, 2004, on foreign investors' purchase of shares of Vietnamese commercial banks.

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The Ministers, Heads of ministerial-level agencies, Heads of Governmental agencies, chairmen of People’s Committees of provinces and central-affiliated cities; presidents of Managing Boards, presidents of Members' Councils and General Directors (Directors) of Vietnamese credit institutions; foreign investors and relevant organizations and individuals shall implement this Decree.

ON BEHALF OF THE GOVERNMENT
PRIME MINISTER




Nguyen Tan Dung