Tiếng Việt- 1 Circular No. 07-BKH/DN of September 11, 1996, guiding business registration of finance leasing companies in Vietnam.
- 2 Circular No. 03/TT-NH5 of September 09, 1996, guiding for the implementation of temporary Regulation on the organization and operation of Finance Leasing Companies in Vietnam issued under the Decree No.64/CP on 9 October, 1995.
| THE GOVERNMENT | SOCIALIST REPUBLIC OF VIET NAM |
| No: 64-CP | Hanoi, October 09, 1995 |
THE GOVERNMENT
Pursuant to the Law on Organization of the Government of September 30, 1992;
Pursuant to the Ordinance on the State Bank, the Ordinance on Banks, Credit Cooperatives and Financial Companies of May 24, 1990;
At the proposal of the Governor of the State Bank,
DECREES:
|
| ON BEHALF OF THE GOVERNMENT |
ON ORGANIZATION AND OPERATION OF FINANCIAL LEASING COMPANIES IN VIETNAM
(issued attached to Decree No.64-CP of October 9, 1995 of the Government)
Article 2.- In these Regulations, the following terms shall be understood as follows:
1/ Lessor: is a Financial Leasing Company having the legal person status and the license for operation in accordance with these Regulations;
2/ Lessee: is a business established under Vietnamese law, and directly uses the leased assets for its legal business purposes during the leasing term;
3/ Leased assets: are machinery, equipment and other movables of advanced technology having a utility period of more than one year, and domestically produced or imported;
4/ Leasing term: is the period during which the lessee uses the leased assets and pays rent as agreed upon by the lessor and the lessee in the leasing contract.
Article 3.- A financial leasing transaction must satisfy one of the following conditions:
1/ Upon the expiry of the leasing term as stated in the leasing contract, the lessee is entitled to transfer the ownership of leased assets or to continue to lease such assets as agreed upon by the two parties;
2/ The leasing contract shall contain the following provision: upon the expiry of the leasing term, the lessee is entitled to opt for the purchase of the leased assets at a nominal price lower than the real value of the leased assets at the time of re-purchase;
3/ The leasing term applicable to one type of assets shall at least equal 60% of the time required for its depreciation;
4/ Total rent for each type of assets stated in the leasing contract shall be at least equivalent to the market value of the assets at the time the leasing contract is signed.
Part I: FINANCIAL LEASING COMPANY
A Financial Leasing Company may be established and operate in Vietnam under the following forms:
1/ Financial Leasing Company: established by Vietnamese banks, financial companies, or jointly by Vietnamese banks, financial companies and other Vietnamese enterprises;
2/ Joint venture Financial Leasing Company: established between a Vietnamese partner consisting of one or more banks, financial companies/or, other enterprises, and a foreign partner consisting of one or more banks, financial companies, financial leasing companies and international financial institutions;
3/ Financial Leasing Company with 100% foreign-owned capital established by foreign banks, financial companies, foreign financial leasing companies.
1/ 55 billion VND for a Financial Leasing Company mentioned in Point 1, Article 5 of these Regulations;
2/ 5 million USD for a joint venture Financial Leasing Company mentioned in Point 2, Article 5 and a Financial Leasing Company with 100% foreign-owned capital mentioned in Point 3, Article 5 of these Regulations.
Part II: CONDITIONS AND PROCEDURES FOR THE ISSUE OF OPERATING LICENSE
2/ The Approval in Principle is valid for 12 months from the date of its issue. During this period, the partners must complete the application file as directed by the State Bank;
Article 12.- After receiving the Operating License, the Financial Leasing Company shall have to:
1/ Pay the operating license fee equal to 0.1% of its statutory capital to the State Bank within 15 days from the date written on the Operating License;
2/ Register its business in accordance with the regulations in force;
3/ Generate 100% of the statutory capital;
4/ Publicize its operating license, business registration and details of its operations in five consecutive issues of a Vietnamese newspaper before the inauguration of its operation as directed by the State Bank;
5/ Fulfill all the above stipulations before commencing its operation, and the inauguration shall not be later than 6 months from the date written on the Operating License.
Article 13.- The Operating License of the Financial Leasing Company shall not be transferable.
Part III: CONTENT AND SCOPE OF OPERATION
Article 14.- Sources of capital:
1/ Self-procured capital: statutory capital, funds and undivided profits;
2/ Loan capital: loans from domestic and foreign financial or credit institutions; bonds and other valuable papers issued with the State Bank's permission;
3/ A Financial Leasing Company shall not receive deposits in any form;
4/ A Financial Leasing Company is entitled to open deposit accounts in the State Bank or other banks operating on the territory of Vietnam. In case it wishes to open deposit accounts in banks located outside the territory of Vietnam, permission from the State Bank shall be required.
1/ The company shall not use more than 25% of its statutory capital to purchase fixed assets for itself;
2/ The loan capital shall not exceed its self-procured capital by 20 times;
3/ The total value of assets leased to one client shall not exceed 30% of its self-procured capital. In case this limit is exceeded, a written approval from the State Bank shall be required;
4/ Other provisions of existing laws and the State Bank's regulations.
Article 16.- A Financial Leasing Company is entitled to carry out the following activities:
1/ Financial leasing;
2/ Providing consultancy and guarantee for clients on services relating to financial leasing;
3/ Carrying out other activities when permitted by the State Bank and other competent State agencies.
Article 19.- The contract must meet the following requirements:
1/ Made in writing;
2/ Registered at the State Bank and the contract-managing agency where the head office of the Financial Leasing Company is located in accordance with the provisions of law;
3/ It cannot be canceled prior to the expiry of the leasing term (cancelment before term) as provided for in the contract.
Article 21.- The contract shall take effect from the date agreed upon by parties to the contract.
RIGHTS AND OBLIGATIONS OF THE PARTIES
Article 22.- Rights and obligations of a Financial Leasing Company:
1/ To be entitled to require the lessee to fully and completely provide quarterly and annual reports on production and business operations and matters related to the leased assets;
2/ To be entitled to the ownership and to attach the ownership sign to the leased assets during the whole leasing term;
3/ To be entitled to require the lessee to pay compensation for all losses caused by the lessee's failure or improper discharge of its responsibility to maintain, repair, and pay insurance for the leased assets during the leasing term;
4/ To be entitled to transfer its rights under the agreement to another financial leasing company without the need to obtain the lessee's consent. In such case, the Financial Leasing
Company must give an advance written notice to the lessee;
5/ To be entitled to require the lessee to make a deposit as security for the contract, or require a guarantor to secure the obligations of the lessee;
6/ To be obligated to register the contract and abide by the procedures to buy insurance for the leased assets;
7/ To be obligated to sign the purchase contract, pay for the leased assets to the supplier in accordance with the terms and conditions of the purchase contract. The Financial Leasing Company shall not be responsible for assets which are not delivered or delivered not in accordance with the terms and conditions agreed upon by the lessee and the supplier. In case the leased assets are imported, the Financial Leasing Company shall have to complete all necessary import procedures;
8/ To fulfill its responsibilities and to pay compensation for all losses incurred by the lessee in case the leased assets are not delivered on time to the lessee due to the violation of the purchase contract by the Financial Leasing Company.
Article 23.- Rights and obligations of the lessee:
1/ To be entitled to select, negotiate and agree with the supplier the technical specifications, type, price, insurance coverage, mode and time of delivery, installation and guarantee of the leased assets;
2/ To be entitled to receive the leased assets directly from the supplier;
3/ In case the contract is canceled before the delivery of the leased assets to the lessee due to the lessee's fault, the lessee shall have to pay compensation for all losses incurred by the Financial Leasing Company;
4/ To be obligated to use the leased assets in comformity with the purposes agreed upon in the contract;
5/ To bear all risks relating to the loss, damage of the leased assets and risks caused to a third party by the leased assets;
6/ To have the responsibility to maintain and repair the leased assets during the leasing term;
7/ Not to transfer the right to use the leased assets to a third party without prior written consent of the Financial Leasing Company;
8/ Not to use the leased assets as collateral or mortgage;
9/ The lessee shall have to duly pay the leasing rental as provided for in the contract and shall, in principle, bear the costs and expenses related to the leased assets such as: import expenditures, tax, expenditures to register the contract and buy insurance for the leased assets;
10/ To have the responsibility to return the leased assets to the Financial Leasing Company upon expiry of the leasing term, and to bear all costs and expenses in connection with the return of the leased assets, except when the lessee is entitled to own or to buy the leased assets, or continue to lease as provided for in the contract.
Article 24.- Termination of the contract prior to the expiry
1/ A Financial Leasing Company may terminate the contract prior to its expiry in the following cases:
- The lessee fails to pay the rent as agreed upon in the contract;
- The lessee breaches any provision of the contract;
- The lessee is insolvent, goes bankrupt, or is dissolved;
- In case a guarantor is required for the lessee but the latter cannot find an alternative guarantor acceptable to the Financial Leasing Company when the guarantor is insolvent, goes bankrupt, or is dissolved;
2/ The lessee may terminate the contract prior to expiry in the following cases:
- The leased asset is not delivered on time as result of the Financial Leasing Company's fault;
- The lessor violates any provision of the contract;
3/ The contract shall be terminated prior to expiry in the event the leased assets were lost or irreparably damaged.
Article 25.- Handling of cases in which the contract is terminated prior to its expiry:
1/ In case the contract is terminated prior to expiry as stipulated in Point 1, Article 24, the lessee is obligated to pay immediately to the Financial Leasing Company the total rent due under the contract.
The Financial Leasing Company is then entitled to recover immediately the leased assets without having to bring the case to any Court or any agency of jurisdiction;
2/ The Financial Leasing Company's ownership over the leased assets shall not be affected, if the lessee is insolvent, goes bankrupt or is dissolved. The leased assets shall not be considered the lessee's assets when these assets are liquidated to pay other creditors;
3/ In case the contract is terminated under Point 3, Article 24, the lessee is obligated to pay immediately the total rent payable under the contract, or if the contract does not allow the lessee to own the leased assets, the lessee shall pay the residual value of the leased assets to the Financial Leasing Company. If the lessee has fully paid the rent due to the Financial Leasing Company, the lessor has the responsibility to refund to the lessee the insurance of the leased assets which has been paid by the insurance company;
4/ In case the contract is terminated prior to expiry due to the Financial Leasing Company's violation of the agreement, the Financial Leasing Company shall have to pay the compensation for all damages incurred by the lessee.
FINANCIAL MATTERS, COST ACCOUNTING
In the event the contract is terminated, re-exportation of the leased assets shall not be subject to export tax.
1/ A Financial Leasing Company shall have to observe the accountancy in accordance with the system of cost accounting issued by the State Bank.
2/ A Financial Leasing Company has to make accurate and adequate accounts and keep its books of accounts related to its operations in accordance with the Ordinance on Accounting and Statistics.
Article 32.- Reporting regime:
1/ A Financial Leasing Company shall implement the periodical reporting regime in accordance with the State Bank's regulations. Any violations of the system of periodical reporting shall be penalized in accordance with the regulations in force;
2/ The assets inventory, the annual financial reports of the Financial Leasing Company shall be certified by an audit company. The selection of an audit company shall be approved by the State Bank.
SUPERVISION, INSPECTION, HANDLING OF VIOLATIONS AND DISPUTES
Disputes among partners of a joint venture Financial Leasing Company shall be resolved through negotiation and conciliation. In case these disputes can not be resolved through conciliation, the agreements laid down in the joint venture contract shall be used as basis to settle such disputes.
AMENDMENT, EXTENSION, TERMINATION OF OPERATION AND LIQUIDATION
2/ In case an extension of its term of operations is needed, the Financial Leasing Company must submit an application to the State Bank 6 months prior to the expiry date provided for in the operating license or the previous extension approval.
2/ In case of voluntary dissolution prior to the license's term, the Financial Leasing Company shall submit a written request to the State Bank for approval, and a dissolution thereof shall be permitted only upon a written approval from the State Bank.
3/ The State Bank shall provide detailed guidance on the order and procedures for dissolution of the Financial Leasing Company under current Vietnamese law.
- 1 Circular No. 08/2001/TT-NHNN of September 06, 2001, guiding the implementation of The Government’s Decree No. 16/2001/ND-CP of May 2, 2001 on the Organization and Operation of Financial Leasing Companies.
- 2 Circular No. 07-BKH/DN of September 11, 1996, guiding business registration of finance leasing companies in Vietnam.
- 3 Circular No. 03/TT-NH5 of September 09, 1996, guiding for the implementation of temporary Regulation on the organization and operation of Finance Leasing Companies in Vietnam issued under the Decree No.64/CP on 9 October, 1995.