Chương 2 Luật các tổ chức tín dụng 1997: Tổ chức và điều hành các tổ chức tín dụng

Chapter II

ORGANIZING AND MANAGING CREDIT INSTITUTIONS

Section 1. GRANTING ESTABLISHMENT AND OPERATION LICENSES

Article 21.- Competence to grant establishment and operation licenses

The State Bank is the body competent to grant establishment and operation licenses to credit institutions and banking operation licenses to other organizations in accordance with the provisions of this Law and other provisions of law.

Article 22.- Conditions for being granted establishment and operation licenses

1. The conditions for a credit institution to be granted an establishment and operation license include:

a/ There is demand for banking activities in the place where the credit institution is to operate;

b/ Having the capital prescribed in Article 83 of this Law;

c/ The founding members are financially prestigious and capable organizations and individuals;

d/ The managerial and executive personnel have the full capacity for civil acts and the professional qualifications suited to each type of credit institution;

e/ Having the organization and operation Statute in accordance with the provisions of this Law and relevant laws;

f/ Having a feasible business plan.

2. The conditions for an organization which is not a credit institution to be granted a license for banking activities include:

a/ The banking activities are necessary and closely associated with the organization's principal operation;

b/ Having sufficient capital and material conditions suitable to the banking operation requirements;

c/ Having a contingent of personnel knowledgeable about banking operations;

d/ Having a feasible business plan for banking activities.

Article 23.- Dossier of application for an establishment and operation license

1. For credit institutions, the dossier of application for an establishment and operation license includes:

a/ The application for an establishment and operation license;

b/ The draft Statute;

c/ The operation plan for the first three years, clearly stating the economic efficiency and benefits of banking activities;

d/ A list, curricula vitae and certificates proving the capabilities and professional qualifications of founding members and members of the Managing Board, the Control Board and the general director (director);

e/ The amount of contributed capital, the capital contribution plan and the list of capital contributing individuals and organizations;

f/ The financial status and other information related to major shareholders;

g/ The competent People's Committee's approval of the location of the credit institution's head office.

2. For organizations which are not credit institutions, the dossier of application for licenses to conduct banking activities includes:

a/ The application for a license to conduct banking activities;

b/ The establishment decision or license, the certificate of registration of the current business line(s);

c/ The Statute;

d/ The list and curricula vitae of the general director (director), members of the Managing Board and the Control Board (if any);

e/ The financial status in the last three years;

f/ The plan on banking activities.

Article 24.- Time limit for granting licenses

Within 90 days from the date of receipt of the full dossiers of application for establishment and operation licenses with regard to credit institutions, for licenses for banking activities with regard to organizations that are not credit institutions, the State Bank must grant or refuse to grant such licenses. In case of refusal, the State Bank shall have to clearly state in writing the reasons.

Article 25.- Licensing fee

The organization to which a license is granted shall have to pay a licensing fee in accordance with the provisions of law.

Article 26.- Use of licenses

1. The organization to which a license is granted must use the right name and operate in compliance with the provisions in the license.

2. The forging, erasing, assignment, lease or lending of a license is forbidden.

Article 27.- Business registration

After being granted a license, a credit institution must register its business in accordance with the provisions of law.

Article 28.- Conditions for operation

1. To conduct banking operations, a credit institution to which a license is granted must meet all the following conditions:

a/ Having its Statute endorsed by the State Bank;

b/ Having the business registration certificate, sufficient legal capital and a head office suitable to the banking operation requirements;

c/ The portion of the legal capital contributed in cash must be deposited in an interest-free escrow account at the State Bank at least 30 days before the commencement of operation. This portion shall be released only after the credit institution starts its operation;

d/ Publishing the provisions of its license on the central and local newspapers in accordance with the provisions of law;

2. To conduct banking activities, an organization which is not a credit institution and already granted a license for banking activities must meet all the following conditions:

a/ Having the business registration certificate, a head office suitable to the banking operation requirements;

b/ Publishing the provisions of the license on the central and local newspapers in accordance with the provisions of law.

3. Within 12 months after receipt of a license from the State Bank, the organization must start its operation.

Article 29.- Revocation of licenses

1. An organization to which a license is granted may have its license revoked in one of the following cases:

a/ The dossier of application for the license proves to have contained intentionally falsified information;

b/ Past the time limit prescribed in Article 28 of this Law, the organization still fails to start its operation;

c/ Voluntary dissolution or compulsory dissolution by decision of a competent agency;

d/ Split-up, merger, consolidation or bankruptcy;

e/ Operating for a wrong purpose;

f/ Lack of the conditions prescribed in Clauses 1 and 2, Article 28 of this Law.

2. After its license is revoked, the organization must immediately terminate its banking activities.

3. The decision to revoke a license shall be announced by the State Bank through the mass media.

Article 30.- The Statute

1. The Statute of a credit institution must contain the following principal contents:

a/ The name and address of the head office;

b/ Contents and scope of its operation;

c/ Operation duration;

d/ The statutory capital and the mode of capital contribution

e/ Tasks and powers of the Managing Board, the general director (director) and the Control Board;

f/ Procedures for voting, appointment or dismissal of the Managing Board members, the general director (director) and the Control Board;

g/ Rights and obligations of shareholders;

h/ Principles in financial, accounting, internal inspection and auditing activities;

i/ Cases of dissolution and procedures for dissolution;

j/ Procedures for amending the Statute.

2. The Statute of a credit institution shall be effected only after it is endorsed by the State Bank, except otherwise provided for by law.

Article 31.- Changes subject to approval

1. A credit institution must seek the approval from the State Bank before it can change one of the following points:

a/ Its name;

b/ The level of legal and/or allocated capital;

c/ The location of its head office, transaction office, branch or representative office;

d/ The contents, scope and duration of its operation;

e/ Assignment of registered shares that exceed the ratio prescribed by the State Bank;

f/ The ratio of shares owned by major shareholders;

g/ Members of the Managing Board, the general director (director) and members of the Control Board.

2. After obtaining the approval from the State Bank, the credit institution shall have to register with the competent State agency the change(s) prescribed in Clause 1 of this Article and make announcements thereon in the central and local newspapers in accordance with the provisions of law.

Section 2. ORGANIZATIONAL STRUCTURE OF CREDIT INSTITUTIONS

Article 32.- Opening of transaction offices, branches and representative offices; establishment of companies and non-business units

Credit organizations are entitled to:

1. Open transaction offices, branches and representative offices in geographical areas inside and outside the country, where there is demand for their operation, even in areas where their head offices are based, after obtaining the written approval from the State Bank;

2. Set up attached companies which have legal person status, apply an independent cost accounting system with their own capital and operate in some financial, banking and insurance fields in accordance with the stipulations of the Government.

3. Establish non-business units after getting the approval from the State Bank.

Article 33.- Conditions, dossiers and procedures for opening transaction offices, branches and representative offices; for establishing companies

1. Credit institutions may open transaction offices, branches and representative offices and set up companies under Article 32 of this Law when they satisfy the following conditions:

a/ Having the minimum operating duration stipulated by the State Bank;

b/ Having profitable business operations and a healthy financial status;

c/ The managerial and executive mechanism and the internal inspection system function effectively;

d/ The information system meets the management requirements;

e/ Not violating the regulations on safety in banking activities and other relevant provisions of law.

2. The application dossier and procedures for opening transaction offices, branches, representative offices and for setting up companies of credit institutions shall comply with the regulations of the State Bank.

Article 34.- Separation, splitting, merger, consolidation, purchase or dissolution

The separation, splitting, merger, consolidation, purchase or dissolution of a credit institution must be approved in writing by the State Bank.

Article 35.- Association between cooperative credit institutions

Cooperative credit institutions shall be entitled to associate with one another in financial regulation and support so as to enhance mutual assistance for ensuring safety and efficiency in the operations of each institution.

Section 3. ADMINISTRATION, MANAGEMENT AND CONTROL

Article 36.- Administration, management and control

1. The election, appointment or dismissal of the chairman and other members of the Managing Board, the head and other members of the Control Board, the general director (director) of a credit institution shall comply with the provisions of law.

2. The chairman and other members of the Managing Board, the head and other members of the Control Board, the general director (director) of a credit institution must be ratified by the Governor of the State Bank or by a person authorized by the Governor of the State Bank, except for cases of appointment by the Prime Minister.

Article 37.- Managing Board

1. The Managing Board of a credit institution has the function to administer the credit institution in accordance with the provisions of this Law and relevant laws.

2. The Managing Board is composed of at least three members who are possessed of professional prestige and morals and knowledgeable about banking activities.

3. The chairman and other members of the Managing Board shall not be allowed to authorize those people who are not members of the Managing Board to perform their tasks or powers.

4. The chairman of the Managing Board must not concurrently be the general director (director) or deputy general director (deputy director) of the same credit institution, except otherwise provided for by law.

5. The chairman of the Managing Board of this credit institution shall not be allowed to participate in the Managing Board or in the management of another credit institution, except for cases where the latter is the former's attached company.

Article 38.- Control Board

1. The Control Board of a credit institution operates in accordance with the provisions of this Law and other provisions of law.

2. The Control Board is tasked to supervise the financial activities of the credit institution; oversee the observance of the accounting regime, operations of the internal inspection and auditing system of the credit institution.

3. The Control Board of a credit institution is composed of at least three people, including its head, and at least half of its member work on a full-time basis.

4. Members of the Control Board must have professional qualifications and morals required by the State Bank.

5. The Control Board may use the internal inspection and auditing system of the credit institution to perform its tasks

Article 39.- General director (director)

1. The general director (director) of a credit institution is a person who take responsibility to the Managing Board for running day-to-day activities according to his/her tasks and powers in accordance with the provisions of this Law and other provisions of law.

2. The general director (director), deputy general director(s) (deputy director(s)) of a credit institution must meet the following criteria:

a/ Residing in Vietnam during the working term;

b/ Having the professional qualifications and capabilities to run a credit institution as defined by the State Bank.

Article 40.- People who shall not be allowed to be members of the Managing Board and the Control Board, or executive officers

1. The following people shall not be elected to the Managing Board, the Control Board or appointed as general director (director) or deputy general director (deputy director):

a/ Being under investigation for penal liability;

b/ Having been sentenced for serious offenses of infringement upon the national security, serious offenses of infringement upon the socialist ownership or citizen's ownership; or serious economic offenses;

c/ Having been convicted of other offenses and such criminal records have not yet been written off;

d/ Being a former member of the Managing Board or former general director (director) of a bankrupt company, except for cases prescribed in Clause 2, Article 50 of the Law on Enterprises' Bankruptcy;

e/ Being a former representative at law of a company which has been suspended from operation due to serious violation of law;

2. Parents, spouses, children and siblings of the Managing Board members, the general director (director) shall not be allowed to be members of the Control Board or the chief accountant of the same credit institution.

Section 4. INTERNAL INSPECTION AND AUDITING SYSTEM

Article 41.- Internal inspection and auditing system

A credit institution shall have to set up an internal inspection and auditing system as part of the executive apparatus to assist the general director (director) in running all professional operations of the credit institution in a smooth, safe and lawful manner.

Article 42.- Internal inspection

Credit institutions shall have to regularly inspect the observance of law and internal regulations; directly inspect operations in all domains at their respective transaction offices, branches, representative offices and attached companies.

Article 43.- Internal auditing

Credit institutions shall have to audit their operations in each period and each area so as to accurately evaluate the results of their business operations and actual financial status.

Article 44.- Reporting of internal inspection and auditing

The result of internal inspection and auditing must be promptly reported to the general director (director), the Managing Board and the Control Board