CIRCULAR

PROVIDING FOR OFFER AND ACCEPTANCE OF TRUSTEESHIP PERFORMED BY CREDIT INSTITUTIONS AND FOREIGN BANK BRANCHES

The Circular No. 30/2014/TT-NHNN dated November 06, 2014 of the Governor of the State Bank of Vietnam providing for offer and acceptance of trusteeship performed by credit institutions and foreign bank branches, becoming effective from January 01, 2015, is amended by:

The Circular No. 14/2016/TT-NHNN dated June 30, 2016 of the Governor of the State Bank of Vietnam on amendments to the Circular No. 30/2014/TT-NHNN dated November 06, 2014 of the Governor of the State Bank of Vietnam, and abrogation of some Articles of the Regulation on factoring services provided by credit institutions promulgated together with the Decision No. 1096/2004/QD-NHNN dated September 06, 2004 of the Governor of the State Bank of Vietnam, which came into force from July 01, 2016.

Pursuant to the Law on State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

Pursuant to the Law on Credits Institutions No. 47/2010/QH12 dated June 16, 2010;

Pursuant to the Government’s Decree No. 156/2013/ND-CP dated November 11, 2013 defining the functions, tasks, powers and organizational structure of the State bank of Vietnam (hereinafter referred to as “SBV”);

At the request of the Head of Bank Supervision and Inspection Agency;

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Chapter I

GENERAL PROVISIONS

Article 1. Scope

1. Credit institutions and foreign bank branches shall be only allowed to perform their trusteeship offer and acceptance in accordance with the provisions set forth in this Circular in respect of the following transactions or operations:

a) Lending;

b) Financial leasing;

c) Capital contribution and stock purchase;

d) Investment in production and business projects;

dd) Corporate bond purchase.

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Article 2. Regulated entities

1. Credit institutions, including:

a) Commercial banks;

b) Banks for social policies;

c) Cooperative banks;

d) Finance companies;

dd) Finance lease companies;

e) Microfinance institutions;

g) People’s credit funds.

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3. Organizations that are not credit institutions or foreign bank branches in Vietnam (hereinafter referred to as “organizations”), and individuals who are residents and non-residents involved in trusteeship offer and acceptance transactions stipulated in this Circular.

Article 3. Interpretation of terms

For the purpose of this Circular, the terms below are construed as follows:

1. “trust” refers to a fiduciary relationship in which one party, known as a trustor who shall take all risks, gives another party, known as a the trustee who shall be paid fiduciary fees, monetary assets to serve the purpose of performing transactions stipulated in Clause 1 Article 1 hereof with the trust beneficiary.

2. “trust beneficiaries” refer to the entities that are entitled to trust assets, including:

a) Individuals or organizations, even inclusive of credit institutions and foreign bank branches who are clients taking out loans and those applying for capital leases;

b) Enterprises or credit institutions that receive paid-in capital, and issue bonds or stocks;

c) Production and business projects.

3. “loan trust” refers to the trustor’s act of entrusting the trustee with the grant of loans to borrowers.

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5. “capital contribution and stock purchase trust” refers to the trustor’s act of entrusting the trustee with the contribution of assets and purchase of stocks of enterprises and credit institutions.

6. “corporate bond purchase trust” refers to the trustor’s act of entrusting the trustee with the purchase of corporate bonds, inclusive of convertible bonds.

7. “production and business project investment trusteeship” refers to the finance company’s acting as the fiduciary for investors who invest their assets in production and business projects as agreed upon in the business cooperation contract.

8. “trust term” refers to the period of time that begins on the date when the trustee commences performing their fiduciary duties and ends on the date when such fiduciary duties have been completely fulfilled as agreed upon in the trust agreement.

9. “trust property” refers to the sum of money that the trustor entrusts to the trustee for the performance of fiduciary duties.

10. “trust fee” refers to the sum of money that the trustor pays to the trustee for the performance of fiduciary duties as specified in the trust agreement, which must conform to legal regulations.

Article 4. Trust principles

1. The trust must be established in writing and must conform to provisions enshrined in this Circular and other relevant laws.

2. The trustor shall be only entitled to form a fiduciary relationship with the trustee in which the trustor is allowed to offer the trusteeship in accordance with laws; the trustee shall be only entitled to form a fiduciary relationship with the trustor in which the trustee is allowed to accept the trusteeship in accordance with laws.

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4. The distribution of trust property must be aligned with the progress in performing fiduciary duties.

5. The trustee shall not be permitted to misuse the trust property and breach their contractual fiduciary duties as agreed upon in the trust agreement.

6. Credit institutions and foreign bank branches that place trust in other credit institutions, foreign bank branches and organizations must compute the balance of entrusted accounts identified within the prudential ratios and limits for operations of credit institutions and foreign bank branches in accordance with SBV’s regulations.

7. Foreign bank branches shall be entrusted by the parent banks or bank branches in host countries with the grant of loans and purchase of bonds in accordance with regulations laid down in this Circular and laws on foreign loan, debt repayment, foreign exchange management as well as other relevant laws.

8. Entrusted assets in foreign currencies must conform to the legal regulations on foreign exchange management and other relevant laws.

9. Credit institutions and foreign bank branches being trustors must carry out the debt classification and set aside reserve funds for risk management in accordance with SBV’s regulations on the balance of the trustor’s assets held in trust.

Credit institutions and foreign bank branches being trustees shall not be required to carry out the debt classification and set aside reserve funds for risk management in accordance with SBV’s regulations on the balance of the trustee’s assets held in trust.

10. With regard to the outward entrustment, credit institutions and foreign bank branches shall be only entitled to entrust banks and fund management companies in overseas countries with the performance of several transactions stipulated in Clause 1 Article 1 hereof within the scope of permitted operations of credit institutions and foreign bank branches pertaining to the foreign exchange that occurs on the international market, as prescribed in SBV’s regulations.

11.2 If credit institutions or foreign bank branches receive the trust property from organizations or individuals, which are invested in production and business projects, or are used for finance leasing and lending purposes, it is essential to ensure that, right at the time when the fiduciary relationship is formed, organizations or individuals being trustors do not have any outstanding debt obligations to these credit institutions or foreign bank branches.

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1. A trust agreement must inter alia include the following information:

a) Name and address of the trustor and trustee;

b) Trust beneficiary: Provision of real name or accurate information that helps identify the trust beneficiary must be closely regulated.

With respect to the stock purchase trust, apart from regulations on provision of real name or accurate information that helps identify the issuers, type and term of bonds must be strictly regulated;

c) Fiduciary purpose;

d) Fiduciary scope, terms and conditions;

dd) Trust term;

e) Fiduciary fee;

g) Trust property; the time of transferring the trust property;

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i) Rights and obligations of the trustor and trustee, which must clearly mandate that the trustor shall take all risks and be entitled to the benefit or interest of the trust, and the trustee shall be entitled to trust fees;

k) Early termination of trust agreement;

l) Dispute settlement.

2. In addition to the information mentioned in Clause 1 of this Article, the trust agreement can enclose other information agreed by contracting parties in conformity with regulations laid down in this Circular and relevant laws.

Article 6. Rights and obligations of the trustor

1. The trustor shall be vested with the following rights:

a) Request the trustee to provide documentary evidences proving that the trustee has obtained permission to offer or accept the trusteeship in accordance with laws;

b) Request the trustee to report and provide necessary materials and information about the status and result of trust agreement execution;

c) Supervise and inspect the compliance of the trustee with their fiduciary duties and scope defined in the trust agreement;

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2. The trustor shall take on the following obligations:

a) Consider and assess function, scope, competence in management, administration, personnel, skills and qualifications, technology and infrastructural system of the trustee with the aim of ensuring that the trustee is eligible to administer the trust and accept the trusteeship;

b) Transfer the title to or ownership of property held in trust to the trustee in accordance with the contractual progress of fiduciary duty performance as agreed upon in the trust agreement;

c) Provide the trustee with information and materials pertaining to their fiduciary duties agreed in the trust agreement;

d) Pay fiduciary fees to the trustee as agreed upon in the trust agreement;

dd) Perform other obligations in accordance with provisions enshrined in the trust agreement and laws.

Article 7. Rights and obligations of the trustee

1. The trustee shall be vested with the following rights:

a) Refuse any of requirements of the trustor pertaining to scope, terms and conditions of the trust, or those of the trust beneficiary which is not agreed in the trust agreement, or infringes upon legal regulations;

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c) Request the trustor to provide necessary information and materials pertaining to the terms and conditions agreed upon in the trust agreement;

d) Exercise other rights in accordance with provisions enshrined in the trust agreement and laws.

2. The trustee shall take on the following obligations:

a) Consider and assess functions and scope of the trustor in order to ensure that the trustor is permitted to offer or accept the trusteeship in accordance with legal regulations;

b) Conform to fiduciary duties and scope as agreed upon in the trust agreement;

c) Examine and inspect the trust beneficiary’s use of trust property in conformity of terms and conditions of the trust agreement;

d) Inform the trustor about the performance of fiduciary duties in a timely and sufficient manner as agreed upon in the trust agreement;

dd) Transfer all of the legal benefits and related documents to the trustor as agreed upon in the trust agreement.

In case the trust agreement is terminated before its expiry date, the trustee shall pay the entrusted sum of money that remains undisbursed, and transfer all of the legal benefits and documents pertaining to the date on which the trust agreement is terminated prematurely, to the trustor as agreed upon in the trust agreement;

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Article 8. 3 (abrogated)

Chapter II

OFFER AND ACCEPTANCE OF TRUSTEESHIP TO/FROM CREDIT INSTITUTIONS AND FOREIGN BANK BRANCHES

Article 9. Cases in which trusteeship offer and acceptance are prohibited

1. Credit institutions and foreign bank branches shall not be allowed to establish the fiduciary relationship with trust beneficiaries ineligible for the credit extension stipulated in Article 126, 127 of the Law on credit institutions and SBV’s regulations on prudential ratios and limits for operations of credit institutions and foreign bank branches.

2. Commercial banks, foreign bank branches, cooperative banks, people's credit funds, and microfinance institutions shall not be allowed to offer and accept the trusteeship for capital leases.

3. Credit institutions (exclusive of commercial banks), foreign bank branches shall not be entitled to offer and accept the trusteeship for capital contribution and stock purchase.

Commercial banks shall not be allowed to offer and accept the trusteeship for capital contribution and stock purchase to/from trust beneficiaries ineligible for such transactions stipulated in Clause 5 Article 129 of the Law on credit institutions and SBV’s regulations on prudential ratios and limits for operations of credit institutions and foreign bank branches.

4. Credit institutions (exclusive of finance companies) and foreign bank branches shall not be allowed to offer and accept the trusteeship for investments in production and business projects.

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6. Credit institutions and foreign bank branches shall not be allowed to offer and accept the trusteeship for purchase of bonds to/from other credit institutions and foreign bank branches.

Article 10. Offer and acceptance of the trusteeship to/from commercial banks

1. Commercial banks shall be entitled to offer their trusteeship to:

a) Other commercial banks, foreign bank branches, finance companies for the purpose of granting loans to clients;

b) Cooperative banks for the purpose of granting loans to clients who are not members of cooperative banks;

c) People's credit funds for the purpose of granting loans to clients who are not members of people's credit funds;

d) Microfinance institutions for the purpose of granting loans to individuals, family households that earn low income, and micro-enterprises;

dd) Other commercial banks and organizations permitted to trade securities by laws for the purpose of contributing capital and purchasing stocks of other enterprises and credit institutions;

e) Other commercial banks, foreign bank branches, organizations permitted to trade securities by laws for the purpose of purchasing corporate bonds.

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a) Other commercial banks, banks for social policies, foreign bank branches, finance companies, cooperative banks and organizations for the purpose of granting loans to clients;

b) Other commercial banks and organizations permitted to trade securities by laws for the purpose of contributing capital and purchasing stocks of other enterprises and credit institutions;

c) Other commercial banks, foreign bank branches, organizations permitted to trade securities by laws for the purpose of purchasing corporate bonds.

Article 11. Offer and acceptance of trusteeship to/from foreign bank branches

1. Foreign bank branches shall be entitled to offer the trusteeship to:

a) Commercial banks, other foreign bank branches, and finance companies for the purpose of granting loans to clients;

b) Cooperative banks for the purpose of granting loans to clients who are not members of cooperative banks;

c) People's credit funds for the purpose of granting loans to clients who are not members of people's credit funds;

d) Microfinance institutions for the purpose of granting loans to individuals, family households that earn low income, and micro-enterprises;

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2. Foreign bank branches shall be entitled to accept the trusteeship from:

a) Parent banks, other branches of parent banks, commercial banks, banks for social policies, other foreign bank branches, cooperative banks and organizations for the purpose of granting loans to clients;

b) Parent banks, other branches of parent banks, commercial banks, other foreign bank branches and organizations permitted to trade securities by laws for the purpose of purchasing corporate bonds.

Article 12. Offer and acceptance of the trusteeship to/from finance companies

1. Finance companies shall be entitled to offer the trusteeship to:

a) Commercial banks and other finance companies for the purpose of granting loans to clients;

b) Cooperative banks for the purpose of granting loans to clients who are not members of cooperative banks;

c) People's credit funds for the purpose of granting loans to clients who are not members of people's credit funds;

d) Microfinance institutions for the purpose of granting loans to individuals, family households that earn low income, and micro-enterprises;

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2. Financial companies shall be entitled to:

a) Receive entrusted investment in production and business projects developed by organizations and individuals;

b) Accept the trusteeship from other commercial banks, banks for social policies, foreign bank branches, finance companies, cooperative banks, organizations and individuals for the purpose of granting loans to clients;

c) Accept the trusteeship from other finance lease companies and finance companies for the purpose of performing financial and capital leasing transactions.

Article 13. Offer and acceptance of the trusteeship to/from finance lease companies

1. Finance lease companies shall be entitled to offer the trusteeship to other finance lease companies, finance companies for the purpose of performing financial and capital leasing transactions.

2. Finance lease companies shall be entitled to accept the trusteeship from other finance companies, finance lease companies for the purpose of performing financial and capital leasing transactions.

3. Finance lease companies shall be entitled to receive entrusted assets from organizations and individuals for the purpose of performing financial and capital leasing transactions.

Article 14. Offer and acceptance of the trusteeship to/from cooperative banks

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2. Cooperative banks shall be entitled to entrust people's credit funds with the task of granting loans to clients who are not members of people's credit funds.

3. Cooperative banks shall be entitled to accept the trusteeship from commercial banks, foreign bank branches and finance companies for the purpose of granting loans to clients who are not members of cooperative banks.

Article 15. Acceptance of the trusteeship from people's credit funds

1. People's credit funds shall be entitled to receive entrusted loans from organizations and individuals.

2. People's credit funds shall be entitled to accept the trusteeship from commercial banks, foreign bank branches, finance companies and cooperative banks for the purpose of granting loans to clients who are not members of people's credit funds.

Article 16. Offer and acceptance of the trusteeship to/from microfinance institutions

1. Microfinance institutions shall be entitled to entrust other microfinance institutions with the task of granting loans to individuals, family households that earn low incomes, and micro-enterprises.

2. Microfinance institutions shall be entitled to accept the trusteeship from other commercial banks, finance companies, foreign bank branches and other microfinance institutions for the purpose of granting loans to individuals, family households that earn low incomes, and micro-enterprises.

Chapter III

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Article 17. Accounting provisions

1. Credit institutions and foreign bank branches being trustors must record all of the on-balance sheet accounts for transactions relating to trust property in order to perform lending, capital leasing and investment in production and business projects, capital contribution, corporate bond purchase towards trustees in accordance with the accounting law.

2. Credit institutions and foreign bank branches being trustees must record all of the off-balance sheet accounts for transactions relating to property held in a trust in order to perform lending, capital leasing and investment in production and business projects, capital contribution, corporate bond purchase in accordance with the accounting law.

Article 18. Reporting provisions

1. Credit institutions and foreign bank branches must report their transactions pertaining to the offer and acceptance of the trusteeship in accordance with SBV’s regulations on statistical report regime applied to credit institutions and foreign bank branches.

2. Credit institutions and foreign bank branches shall be responsible for providing information about the operating outcome of trusteeship offer and acceptance for the National Credit Information Center of Vietnam in accordance with SBV’s regulations on credit information-related activities.

Article 19. Transitional provisions

In respect of the trust agreement concluded before the effective date of this Circular, credit institutions and foreign bank branches shall be allowed to adhere to their contractual terms and conditions as well as legal regulations, which takes effect at the time of concluding such agreement and ends on the date when the validity of such agreement expires, and shall not be allowed to renew this agreement. Adjustment or amendment to the aforementioned agreement shall be allowed only when such adjustment or amendment conforms to regulations laid down in this Circular and relevant laws.

Chapter IV

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Article 20. Responsibility of Bank Supervision and Inspection Agency

1. Inspect and supervise trusteeship offer and acceptance carried out by credit institutions and foreign bank branches in accordance with regulations set forth in this Circular.

2. Impose penalties for administrative violations committed during activities of trusteeship offer and acceptance carried out by credit institutions and foreign bank branches in accordance with legal regulations on penalties for administrative violations in the domain of currency and banking operations.

3. Cooperate with the Departments of Forecast, Statistics, Finance – Accounting, Foreign Exchange Management in the management of trusteeship offer and acceptance activities carried out by credit institutions and foreign bank branches.

Article 21. Responsibility of relevant bodies

1. Responsibility of the Foreign Exchange Management Department:

Monitor and manage foreign loans and debt repayments pertaining to trusteeship offer and acceptance carried out by credit institutions and foreign bank branches in accordance with legal regulations.

2. Responsibility of each SBV’s branches in provinces or central-affiliated cities:

a) Inspectors/ supervisors of SBV’s branches in provinces or central-affiliated cities where the Bank Supervision and Inspection Agency’s branches are not present shall inspect and supervise the trusteeship offer and acceptance carried out by credit institutions and foreign bank branches in that area within the scope of their functions and duties;

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3. Responsibility of the National Credit Information Center of Vietnam:

a) Receive and collect information about trusteeship offer and acceptance provided by credit institutions and foreign bank branches;

b) Provide information about trusteeship offer and acceptance carried out by credit institutions and foreign bank branches in accordance with SBV’s regulations on credit information-related activities.

Chapter V

IMPLEMENTARY PROVISIONS4

Article 22. Effect

1. This Circular comes into force from January 01, 2015.

2. The following documents and regulations shall become defunct:

- The State Bank’s Circular No. 04/2012/TT-NHNN dated March 08, 2012 providing for trusteeship offer and acceptance carried out by credit institutions and branches of foreign banks;

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3. The Chief of Office, the Chief Inspector of the Bank Supervision and Inspection Agency, Heads of SBV’s affiliates, Directors of SBV’s branches in centrally-affiliated cities and provinces, Chairpersons of the Boards of Directors, Chairpersons of the Boards of Members, General Directors (Directors) of credit institutions and foreign bank branches shall be responsible for enforcing this Circular./.

VERIFIED BY

PP. GOVERNOR
DEPUTY GOVERNOR




Nguyen Dong Tien

1 The Circular No. 14/2016/TT-NHNN dated June 30, 2016 of the Governor of the State Bank of Vietnam on amendments to the Circular No. 30/2014/TT-NHNN dated November 06, 2014 of the Governor of the State Bank of Vietnam, and abrogation of some Articles of the Regulation on factoring services provided by credit institutions promulgated together with the Decision No. 1096/2004/QD-NHNN dated September 06, 2004 of the Governor of the State Bank of Vietnam has been promulgated pursuant to:

The Law on State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

The Law on Credits Institutions No. 47/2010/QH12 dated June 16, 2010;

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The Government’s Decree No. 156/2013/ND-CP dated November 11, 2013 defining the functions, tasks, powers and organizational structure of the State bank of Vietnam;

The request of the Head of Bank Supervision and Inspection Agency;

2 This clause is supplemented in accordance with Clause 1 Article 1 of the Circular No. 14/2016/TT-NHNN dated June 30, 2016 of the Governor of the State Bank of Vietnam on amendments to the Circular No. 30/2014/TT-NHNN dated November 06, 2014 of the Governor of the State Bank of Vietnam, and abrogation of some Articles of the Regulation on factoring services provided by credit institutions promulgated together with the Decision No. 1096/2004/QD-NHNN dated September 06, 2004 of the Governor of the State Bank of Vietnam, which came into force from July 01, 2016.

3 This clause is abrogated in accordance with Clause 2 Article 1 of the Circular No. 14/2016/TT-NHNN dated June 30, 2016 of the Governor of the State Bank of Vietnam on amendments to the Circular No. 30/2014/TT-NHNN dated November 06, 2014 of the Governor of the State Bank of Vietnam, and abrogation of some Articles of the Regulation on factoring services provided by credit institutions promulgated together with the Decision No. 1096/2004/QD-NHNN dated September 06, 2004 of the Governor of the State Bank of Vietnam, which came into force from July 01, 2016.

4 Article 3 and Article 4 of the Circular No. 14/2016/TT-NHNN dated June 30, 2016 of the Governor of the State Bank of Vietnam on amendments to the Circular No. 30/2014/TT-NHNN dated November 06, 2014 of the Governor of the State Bank of Vietnam, and abrogation of some Articles of the Regulation on factoring services provided by credit institutions promulgated together with the Decision No. 1096/2004/QD-NHNN dated September 06, 2004 of the Governor of the State Bank of Vietnam, which came into force from July 01, 2016, stipulate as follows:

“Article 3. Effect

1. This Circular comes into force from July 01, 2016.

2. Clause 3 Article 1 of the Decision No. 30/2008/QD-NHNN dated October 16, 2008 of the Governor of the State Bank of Vietnam on amendments to some Articles of the Regulation on factoring services provided by credit institutions promulgated together with the Decision No. 1096/2004/QD-NHNN dated September 06, 2004 of the Governor of the State Bank of Vietnam is abrogated.

Article 4. Implementation

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