Procedures for applying for a license for a financial company in Vietnam

The fast-growing financial market is an inevitable result of economic development and the establishment of financial companies that have been solving the borrowing needs of customers who do not meet the requirements. meet strict regulations and legal barriers of banks. What is the licensing procedure for a financial company? What conditions need to be met? Let’s find out with Lawyer X about “The procedure for applying for a license for a financial company in Vietnam”. Invite your reference.

Legal grounds

• Law on Credit Institutions 2010
• Decree No. 39/2014/ND-CP on activities of finance companies and financial leasing companies
• Decree No. 10/2011/ND-CP amending and supplementing Decree 141/2006/ND-CP

What is a financial company?

Finance company means an enterprise in the form of a non-banking credit institution; mobilize capital for loans, invest, provide financial consulting services; currency, but on its own principle, it is allowed to act as a payment service and not receive deposits for less than one year.

According to the Law on Credit Institutions amended and supplemented in 2017, non-banking credit institution is a type of credit institution that is entitled to perform one or several banking activities as prescribed, except for activities of receiving money. personal deposits and provide payment services through customer accounts. Non-bank credit institutions include financial companies, finance leasing companies and other non-banking credit institutions.

The organization and operation of financial companies are also subject to some limitations of the law applicable to credit institutions in order to ensure the safety of banking activities in the economy.

Characteristics of a financial company

Legal capital level

A financial company must also have legal capital in accordance with the provisions of law upon its establishment. The legal capital of these non-banking organizations is lower than that of commercial banks. The law stipulates that a financial company must have legal capital of VND 500 billion if established after 2018. Before 2018, the legal capital is VND 300 billion.

Operating hours of financial companies

As a rule, companies are only allowed to operate for 50 years or less. If they want to extend the time, organizations must make a request and get the approval of the state bank. The extension period must not exceed 50 years.

Types of financial companies

Currently, financial companies are organized in the following forms:

• State Finance Company

Is a Finance Company invested by the State, established and organized to manage business activities.

• Joint Stock Finance Company

Is a Finance Company which is jointly invested by organizations and individuals, established and organized to manage business activities

• Finance company affiliated to a credit institution

Is a Finance Company established by a credit institution with its own capital and as an owner according to the provisions of law, with independent accounting and legal status.

• Joint Venture Finance Company

Is a Finance Company established by capital contribution between a Vietnamese party and a foreign party, on the basis of a joint venture contract.

• Finance company with 100% foreign capital

A Finance Company established with the capital of one or more foreign credit institutions in accordance with the laws of Vietnam.

Application for a license for a financial company

An application file for a license for a financial company includes:

Application for a License

Draft Charter in accordance with regulations;

Establishment scheme, feasible business plan;

List, curriculum vitae, diplomas and certificates of expertise of the General Director, members of the Supervisory Board, members of the Board of Directors, founding members of the financial company;

Charter capital contribution plan, list with commitments on charter capital contribution of capital contributors

Financial position and relevant information about major shareholders.

If the major shareholders are enterprises, they need to submit:

Decision to establish a financial company;

Current Charter ;

Certificate of competent authority on the amount of charter capital and actual capital;

The document appointing the legal representative of the enterprise;

Financial balance sheet, profit and loss results and operation report for the last 3 years.

The application file for this license shall be submitted at the State Bank. The time limit for consideration and issuance of permits is 90 days from the date of receipt of complete dossiers.

Licensing conditions for financial companies

For joint venture finance companies, 100% foreign-owned credit institutions

Foreign credit institutions may conduct banking activities according to the law of the country where the foreign credit institution’s head office is located;

The foreign financial company has a healthy operation, meets the conditions on total assets, and financial situation, and ensures safety according to regulations of the State Bank;

The operation of applying for a permit to perform in Vietnam is an activity that a foreign financial company is permitted to conduct in the country where its head office is located;

The foreign competent authority has signed an agreement with the State Bank on the supervision of banking activities, has committed in writing to supervise the consolidation in accordance with international practices with the operation of the financial company;

The foreign financial company must have a written commitment to provide financial, administrative, operational, technological and operational support to a 100% foreign owned financial company or a joint venture financial company; ensure to maintain the actual value of charter capital not lower than the legal capital level;

Conditions for founding members

The founding members of a financial company are organizations and individuals with prestige and financial capacity. They must satisfy the following conditions:

For the organization

A Vietnamese enterprise that is not a credit institution needs to:

Having a minimum equity of VND 500 billion in the year immediately preceding the year of application for the establishment of a two-member limited liability financial company. If setting up a one-member limited liability financial company, the owner’s equity must be at least VND 1,000 billion; must have a commitment to provide financial support to the financial company
Profitable business in the year immediately preceding the year in which the financial company is proposed
Contributed capital for the establishment of a financial company must ensure: equity minus the difference between long-term investments and long-term debt must be at least equal to the amount of capital contributed as committed.
If it is a Vietnamese credit institution, then:

Having total assets of at least VND 50,000 billion; the ratio of bad debt to total outstanding loans is less than 3% at the time of capital contribution;
After capital contribution, it is necessary to maintain the safety ratio in operation according to the law
Not violating regulations on safety in operation as prescribed by the State Bank of Vietnam for 06 consecutive months;
Healthy and safe business activities; profitable in the year immediately preceding the year of establishment of the financial company.
If it is a foreign credit institution:

Healthy and safe business activities; profitable in the year immediately preceding the year of establishment of the financial company;
Having total assets of more than 10 billion USD at the end of the previous year;
If a foreign credit institution is a bank, it must be a reputable bank, rated by an international rating agency from medium and stable or higher, with a bad debt ratio of less than 3%.

For individuals

For individuals participating in capital contribution to establish a financial company, it is necessary to ensure:

Having Vietnamese nationality, not being banned under regulations;

Having financial capacity to contribute capital to establish a financial company;

Committed to providing financial support to the financial company to solve difficulties when necessary.

Have a university or postgraduate degree in economics or law;

Not being prosecuted for penal liability, having a criminal record;

Related article:

What do you need to establish a company in Vietnam?

Conditions for securities company establishment in Vietnam

Conditions for financial companies to conduct banking activities

Banking activities must be recorded in the Establishment and Operation License issued by the State Bank. Having a contingent of qualified and capable staff, material foundations, technology and means; equipment, internal regulations on foreign exchange management. Having a contingent of qualified and capable staff, facilities and technology; equipment and internal regulations as prescribed to carry out banking activities. Meeting the professional conditions for banking activities as prescribed.

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