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The State Bank of Vietnam has announced that the Law on Credit Institutions 2024 (CIs) has introduced changes regarding the ratio of share ownership by a shareholder, a group of shareholders, and related parties. The amendments also cover the determination of related parties and indirect share ownership. As a result, it is necessary to develop this draft Circular to guide the implementation of these new regulations by credit institutions in the coming time.
This draft Circular stipulates the responsibilities of commercial banks (except for those under special control) with shareholders, groups of shareholders, and related parties who own shares exceeding the ratio prescribed in Article 55 of the Law on Credit Institutions No. 47/2010/QH12, which has been amended and supplemented with certain articles according to Law No. 17/2017/QH14 (referred to as “shareholding exceeding the ratio”). It outlines the development and implementation of a roadmap to ensure compliance with the provisions of the Law on Credit Institutions No. 32/2024/QH15 (referred to as the “compliance roadmap”).
This Circular applies to shareholders, groups of shareholders, and related parties of those shareholders (referred to as the “group of related shareholders”) who own shares exceeding the ratio, as well as commercial banks with such shareholders (referred to as “commercial banks”).
Developing the Compliance Roadmap
The draft Circular states that commercial banks shall coordinate with shareholders, groups of shareholders, and related parties who own shares exceeding the ratio to develop and implement a compliance roadmap that aligns with the restructuring plan approved by the competent authority of the shareholders and related parties. This ensures adherence to the provisions of the Law on Credit Institutions.
Commercial banks are responsible for reviewing the list of shareholders, groups of shareholders, and related parties who own shares exceeding the ratio. The deadline for finalizing this data and determining the list is set as of June 30, 2024 (*).
Commercial banks shall work together with shareholders, groups of shareholders, and related parties who own shares exceeding the ratio to establish a compliance roadmap in accordance with the Law on Credit Institutions.
The compliance roadmap of commercial banks must include at least the following contents:
a) A list of shareholders, groups of shareholders, and related parties currently owning shares that exceed the ratio, including information such as the name of the organization, business registration certificate number or equivalent legal documents, date of issuance, issuing agency, enterprise code, and address of the head office. Details about the number and ratio of shares owned in the chartered capital of the commercial bank (including entrusted and entrusted shares held by other organizations or individuals); the name of the organization or individual receiving the authorization or entrustment and their relationship with the organization.
Information about the representative of the contributed capital, as well as related parties of the shareholders and groups of shareholders within the group of related shareholders.
b) The measures to be implemented (such as shareholders reducing their shareholding ratio in the commercial bank or other measures) and the corresponding timelines to ensure compliance with the Law on Credit Institutions.
c) A commitment from the commercial bank to coordinate and urge shareholders and groups of related shareholders who own shares exceeding the ratio to rectify the situation according to the specified compliance roadmap.
The draft also clarifies that commercial banks shall submit the compliance roadmap directly or through postal services to the State Bank of Vietnam (via the Banking Inspection and Supervision Agency), shareholders, groups of shareholders, and related parties who own shares exceeding the ratio within 120 days from the effective date of this Circular.
In case it is necessary to ensure the safe operation of the commercial bank, the Banking Inspection and Supervision Agency may request the commercial bank to revise and complete the compliance roadmap. Within 30 days from the receipt of such a request, the commercial bank must make the necessary revisions and submit the updated compliance roadmap to the State Bank of Vietnam (via the Banking Inspection and Supervision Agency), shareholders, groups of shareholders, and related parties who own shares exceeding the ratio.
Implementing the Compliance Roadmap
According to the draft, commercial banks and related organizations and individuals mentioned in the compliance roadmap are responsible for implementing the roadmap that has been submitted to the State Bank of Vietnam.
During the implementation of the compliance roadmap, if necessary, commercial banks shall coordinate with related organizations and individuals to adjust the measures and implementation timeline while ensuring adherence to the overall timeline. The commercial bank shall submit the adjusted compliance roadmap directly or through postal services to the State Bank of Vietnam (via the Banking Inspection and Supervision Agency), shareholders, groups of shareholders, and related parties who own shares exceeding the ratio and are subject to the compliance roadmap.
Shareholders, groups of shareholders, and related parties at commercial banks who own shares exceeding the ratio must not increase the number of shares they hold in any form until they comply with the shareholding limit prescribed by law, except in cases of receiving bonus shares or dividends in shares.
From the effective date of this Circular, credit institutions shall not provide credit or new credit (in case credit has been provided) to shareholders, groups of shareholders, and related parties who own shares exceeding the limit or are related to such shareholders.
Shareholders and groups of related shareholders who currently own shares exceeding the ratio are not entitled to receive cash dividends (if any) for the shares held above the limit until they comply with the prescribed shareholding limit.
In case commercial banks, shareholders, groups of shareholders, and related parties fail to comply with the compliance roadmap, the State Bank of Vietnam will consider and apply appropriate handling measures based on the nature and severity of the case, in accordance with the provisions of the law.
Minh Hiển
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