Commitment to Ensuring the Legality of Capital Sources for Share Purchases
Circular No. 50/2025/TT-NHNN was issued to implement Resolution No. 66/NQ-CP of the Government dated March 26, 2025, regarding the Program to Reduce and Simplify Administrative Procedures Related to Production and Business Activities in 2025 and 2026. It also outlines the plan to further reduce processing times and simplify administrative procedures related to production and business activities under the management of the State Bank of Vietnam in 2025, as per Decision No. 3539/QĐ-NHNN.
Additionally, the new regulations aim to notify business registration authorities of changes in ownership, capital contributions, and related information for commercial banks and foreign bank branches. These changes must be reported to the business registration authority to update the business registration as stipulated in Decree No. 168/2025/NĐ-CP dated June 30, 2025, by the Government on enterprise registration.
Regulations on dossiers and procedures for approving certain changes in commercial banks and foreign bank branches. Illustrative image
One notable aspect is the procedure for purchasing or acquiring shares that result in becoming a major shareholder in a commercial bank. Commercial banks must submit a written request detailing the number, total par value, and type of shares to be purchased or acquired; information about the buyer; the ownership ratio compared to the charter capital of the buyer and related parties after the transaction; and the expected transaction timeline.
Furthermore, the State Bank of Vietnam (SBV) requires that buyers commit to informing individuals and organizations purchasing shares about the rights and obligations of shareholders as per the Law on Credit Institutions and related laws. This includes ensuring the legality of the capital source used for the purchase, not using credit from credit institutions or foreign bank branches, or funds from corporate bond issuances. Buyers must also refrain from purchasing shares under the names of other individuals or legal entities, except in cases of legally authorized trusteeship. Compliance with regulations on share ownership ratios, foreign investor ownership limits, and major shareholder requirements is also mandatory.
Clarification Required on Capital Increase Methods
Other significant regulations pertain to capital increases by banks. According to the Circular, for joint-stock commercial banks increasing their charter capital through convertible bond conversions, supplementary capital reserves, share premiums, retained earnings, and other funds as per the law, the dossier submitted to the SBV must include a written request and a capital increase plan approved by the General Meeting of Shareholders.
The written request must clearly state the necessity of the capital increase, the current charter capital, the share structure (including common shares, preferred shares, and treasury shares, if any), the expected capital increase, and the source of funds. It must also specify the expected issuance timeline and completion date for the additional share issuance. Banks must provide information on the total foreign ownership ratio at the time of the request and the projected ratio after the capital increase, along with the resolution or decision of the General Meeting of Shareholders approving the capital increase plan.
The capital increase plan must detail the specific method of capital increase. For increases through convertible bond conversions, the plan must include detailed information on the number, par value, and maturity of the bonds issued and to be converted, including the number of bonds, par value, and conversion ratio.
For increases using supplementary capital reserves, share premiums, or other funds as per the law, banks must report the status of these funds based on the audited standalone financial statements of the year preceding the dossier submission. They must also specify the amount intended for the charter capital increase. When using retained earnings, the plan must be based on the audited standalone and consolidated financial statements of the year preceding the dossier submission, along with the amount intended for the charter capital increase.
Additionally, the dossier must include a list of shareholders owning 5% or more of the voting shares and charter capital at the time of plan approval and the projected ownership after the increase. This list must include full identification details of the shareholders, ownership ratios, and information about related parties holding shares in the bank. Banks must also provide a list of shareholders owning 5% or more and a list of shareholders and related parties owning 15% or more at the time of the request and the projected ownership after the increase, along with identification details and ownership ratios as per the law.
