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Decree No.39/2014 of Government
This Decree defines the operation of financial company and financial leasing company; with objectives including the financial company and financial leasing company which are established and operating in Vietnam; Organizations and individuals related to the operation of financial company and financial leasing company.

 

THE GOVERNMENT
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SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
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No: 39/2014/ND-CP

Hanoi, May 07, 2014

 

DECREE

ON OPERATION OF FINANCIAL COMPANY AND FINANCIAL LEASING COMPANY

Pursuant to the Law on organization of Government dated December 25, 2001;

Pursuant to the Law on State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010;

At the proposal of the Governor of State Bank of Vietnam;

The Government issues the Decree on operation of financial company and financial leasing company;

Chapter 1.

GENERAL PROVISION

Article 1. Scope

This Decree defines the operation of financial company and financial leasing company;

Article 2. Objective

1. The financial company and financial leasing company are established and operating in Vietnam;

2. Organizations and individuals related to the operation of financial company and financial leasing company specified in Clause 1 of this Article;

Article 3. Explanation of terms

In this Decree, the terms below are construed as follows:

1. Consolidated financial company is a financial company entitled to carry out the activities specified in the Law on Credit Institutions and this Decree.

2. Specialized financial company includes the factoring financial company, the financial company for consumer credit and the financial leasing company as provided for in this Decree and the guidance of the State Bank of Vietnam (hereafter referred to as the State Bank).

3. Factoring financial company is a specialized financial company, mainly operating in the area of factoring as provided for by this Decree;

4. Financial company for consumer credit is a specialized financial company, mainly operating in the area of consumer credit as provided for by this Decree;

5. Financial leasing company is a specialized financial company whose main operation is financial leasing as provided for by this Decree. The outstanding loan to financial leasing must account for 70% of the total outstanding loan of credit granting;

6. Consumer credit is the form of credit granting for individual’s consumption by lending operation including installment loan, consumer loan and issue of credit;

7. Financial leasing is the medium and long term credit granting on the basis of financial leasing contract between the financial lessor and financial lessee. The financial lessor commits to buy the financial-leasing assets at the request of the financial lessee and holds the ownership of financial-leasing assets during the term of financial leasing. The financial lessee uses the financial-leasing assets and makes payment of rent during the term of lease as specified in the contract of financial leasing contract;

8. Financial-leasing assets (hereafter referred to as leased assets) are machinery, equipment or other assets as stipulated by the State Bank of Vietnam which shall provide specific guidance on types of leased asset for each period;

9. Financial lessor (hereafter referred to as the lessor) is a financial leasing company or financial company;

10. The financial lessee (hereafter referred to as the lessee) is organizations or individuals that are operating in Vietnam and directly using the leased assets for their activities;

11. Rent is the amount that the lessee must pay the lessor under the agreement in the financial leasing contract;

12. Financial leasing contract is an irrevocable contract, signed between the lessor and the lessee concerning the financial leasing for one or a number of assets.

13. Buying and sub-leasing in the form of financial leasing (hereafter referred to as buying and sub-leasing) is that the financial lessor buys the machinery, equipment or other assets under regulations of law owned by the sub-lessee and the sub-lessor of those assets in the form of financial leasing so that the lessee may continue using them for its activities. In the buying and sub-leasing, the lessee is also the provider of leased assets;

Article 4. Conversion of type

1. A consolidated financial company is added or modified its contents of operation specified in this Decree to be converted into a specialized financial company;

2. A specialized financial company must not be added its contents of operation for conversion to a consolidated financial company;

3. Based on the result of inspection, examination and supervision of the State Bank of Vietnam during the re-structure of financial company, the State Bank shall make a decision on the merger, consolidation or conversion of type of financial company;

Chapter 2.

OPERATION OF FINANCIAL COMPANY

Article 5. Banking operation of financial company

The general conditions for a financial company to perform its banking operation are specified in Clause 1, Article 108 of the Law on credits institutions:

1. The banking operation of financial company must be specified in the establishment and operation Permit issued by the State Bank (hereafter referred to as the Permit);

2. Having qualified staff with professional capacity, material facilities, technology, means, equipment and internal regulations as provided for by law for the implementation of banking operation specified in the Permit;

3. For banking operations related to the foreign exchange, the financial company must comply with regulations of law on management of foreign exchange;

4. Fulfilling the operational conditions for banking operation stipulated by the State Bank;

Article 6. Issue of certificates of deposit, bonds, treasury bills and bonds to raise funds from organizations

Financial company is entitled to issue certificates of deposit, bonds, treasury bills and bonds to raise funds from organizations upon fulfillment of conditions as follows:

1. Conditions specified in Article 5 of this Decree;

2. Minimum time of operation, results of operation and business provided for by the State Bank.

3. The issue plan of long-term valuable papers must be adopted by the General Meeting of Shareholders or the Board of Directors, Board of members under the regulations of law.

Article 7. Loans from credit institutions and financial institutions in the country and abroad

The financial company may get a loan from credit institutions and financial institutions in the country and abroad upon fulfillment of conditions as follows:

1. Conditions specified in Article 5 of this Decree;

2. Not subject to the cases where the State Bank applies restrictive measures, suspension, temporary suspension of the implementation of borrowing activities on the interbank market without overdue debts at credit institutions, branches of foreign bank as provided for by the State Bank.

Article 8. Loan from the State Bank in the form of refinancing

The financial company may get a loan from the State Bank in the form of refinancing upon fulfillment of conditions as follows:

1. Conditions specified in Article 5 of this Decree;

2. Fulfillment of conditions for cash-out refinancing provided for by the State Bank;

3. The purpose of loan is in accordance with the operating target of monetary policy of the State Bank from time to time.

Article 9. Loans including installment loans and consumer loans

Financial company is entitled to loan, including installment loan and customer loan upon fulfillment of conditions specified in Article 5 of this Decree;

Article 10. Bank guarantee

Financial company may implement the the operation of bank guarantee upon fulfillment of conditions as follows:

1. Conditions specified in Article 5 of this Decree;

2. Fullfillment of conditions for the guarantee and the guarantor as provided for by the State Bank;

Article 11. Factoring

1. Financial company may carry out its factoring activities upon fulfillment of conditions as follows:

a) Conditions specified in Article 5 of this Decree;

b) Having internal regulations on process, order and principles to recognize customers for close supervision to ensure the prevention of abuse for the purpose of money laundering, terrorist financing and other crimes.

2. Financial company established and operating before the effective date of this Decree may add the factoring activities upon fulfillment of conditions specified in Clause 1 of this Article and the following conditions:

a) Business activities with profit at least in the year preceding the year proposed for additional operation;

b) Having a minimum time of operation and plan for factoring activities as stipulated by the State Bank;

c) Complying with regulations on prudential ratios in banking operation, debt classification and continuous appropriation of risks in all quarters of the year preceding the year proposed for additional operation;

d) Non-performing loan below the level specified by the State Bank;

dd) Not being sanctioned for administrative violations in the field of money and banking within 01 year from the time of request for additional operation backwards;

Article 12. Issue of credit card

1. Financial company may issue credit card upon fulfillment of conditions specified in Clause 1, Article 11 of this Decree;

2. Financial company established and operating before the effective date of this Decree may add the issue of credit card upon fulfillment of conditions specified in Clause 1 of this Article and the following conditions:

a) The conditions specified at Point c, d, dd, Clause 2, Article 11 of this Decree;

b) Business operation with continuous profit at least in 02 years preceding the year proposed for additional operation;

c) Having a minimum time of operation and plan for issue of credit card as stipulated by the State Bank;

Article 13. Financial leasing

1. Financial company may carry out the financial leasing activities under the provisions on financial leasing in Chapter III of this Decree upon fulfillment of the following conditions:

a) Conditions specified in Clause 1, 2 and 4 of Article 5 of this Decree;

b) Having internal regulations on process, order and principles to recognize customers for close supervision to ensure the prevention of abuse for the purpose of money laundering, terrorist financing and other crimes.

2. Financial company established and operating before the effective date of this Decree may add its financial leasing activities upon fulfillment of conditions specified in Clause 1 of this Article and the following conditions:

a) The conditions specified at Point a and b, Clause 2, Article 12 of this Decree;

b) Having a minimum time of operation and plan for financial leasing activities as stipulated by the State Bank;

Article 14. Other activities of financial company

Financial company may carry out other activities specified from Article 109 to 111 of the Law on Credit Institutions;

Article 15. Operation of factoring financial company and financial company for consumer credit

1. Conditions for factoring activities of factoring financial company:

a) Conditions specified in Clause 1, Article 11 of this Decree;

b) Minimum factoring outstanding loan accounts for 70% of the total outstanding loan of credit granting;

2. Factoring financial company may carry out activities specified at Point a and e, Clause 1 of Article 108 of the Law on Credit Institution, Article 6, 7, 8, 11 and 14 of this Decree upon fulfillment of conditions specified in this Decree, except for the following activities:

a) Underwriting of issue of corporate bonds and trading of corporate bonds;

b) Receipt of entrusted capital of the Government, organizations and individuals to carry out investment in business and production projects;

c) Entrustment of capital for other credits institutions to carry out the credit granting;

3. Conditions for activities of consumer credit of financial company for consumer credit:

a) Conditions specified in Article 9 and/or Article 12 of this Decree;

b) Outstanding loan of consumer credit accounts for at least 70% of total outstanding loan of credit granting or a different rate stipulated by the State Bank from time to time.

4. The financial company for consumer credit may carry out activities specified at Point a and e, Clause 1, Article 108 of the Law on Credit Institutions, Articles 6, 7, 8, 9, 12 and 14 of this Decree upon fulfillment of conditions specified in this Decree, except for activities specified at Point a, b and c, Clause 2 of this Article;

Chapter 3.

OPERATION OF FINANCIAL LEASING COMPANY

Article 16. Operation of financial leasing company

1. Financial leasing company may carry out the activities specified from Article 112 to Article 116 of the Law on Credit Institutions and the provisions in this Decree;

2. Buying and sub-leasing

3. Being entitled to sell the receivables from the financial leasing contracts to the organizations and individuals as stipulated by the State Bank;

Article 17. The lessor’s rights

1. Having the right of ownership of leased assets during the lease term without being affected in case where the lessee goes banksrupt, is dissolved or has other disputes or lawsuit before Court involving another party. The leased assets must not be regarded as the lessee’s assets when processing these assets to pay debts to other creditors.

2. Having the right to attach the sign of ownership of the lessor on the leased assets during the lease term;

3. Having the right to require the lessee to deposit and other security measures as provided by law if necessary;

4. Having the right to require the lessor to provide information on the provider, make a report on quarterly business and production, report on annual financial finalization and other issues related to the lessee and the leased assets;

5. Having the right to inspect the management and use of leased assets;

6. Transferring its rights and obligations in the financial leasing contract to another financial leasing party. In this case, the lessor must provide prior written notice to the lessee.

7. Requiring the lessee to make compensation for damage upon violation of terms and conditions specified in the financial leasing contract;

8. Being entitled to terminate contract before maturity and requiring the lessee to make full payment of remaining rent and expenses arising due to the termination of contract before maturity resulted in the lessee’s breach of terms and conditions as a basis for termination of contract specified in the financial leasing contract;

9. Having the right to recover the leased assets when the lessee uses and operates the leased assets in contradiction with the provisions of financial leasing company; request the competent state authority to apply the measures stipulated by law to ensure that the lessor to exercise the owner’s rights for the leased assets;

10. Having the right to recover the leased assets which are damaged and cannot be restored or repaired; require the lessee to make payment of remaining rent and other expenses arising for the recovery of leased assets;

11. Other rights under the provisions in the financial leasing contract;

Article 18. Lessor’s obligations

1. Assessing the financial capacity and reputation of the provider legally operating and the leased assets including their technical specifications, types, price, time of delivery, installation, warranty, feasibility and efficiency of investment project of business and production, conditions for financial leasing, purpose of use of leased assets and solvency of the lessee;

2. Buying and importing the leased assets as agreed by both parties in the financial leasing contract;

3. Registering the ownership and performing the procedures for buying insurance of the leases assets under regulations of law;

4. The lessor shall not take responsibility for the failure of delivery of leased assets or for the delivery of improper conditions agreed between the lessee and the provider;

5. Fully complying with the other terms and conditions specified in the financial leasing contract;

Article 19. Lessee’s rights

1. Receiving and using the leased assets under the provisions of financial leasing contract;

2. Making a decision on purchase of assets or continued leasing after the end of lease term;

3. Requiring the lessor to make compensation for the damage when it breaches the terms and conditions of the financial leasing contract;

4. Other rights under the provisions of financial leasing contract;

Article 20. Lessee’s obligations

1. Taking responsibility for its choice of leased assets, provider, terms and conditions related to the leased assets, including their technical specifications, types, price, time of delivery, installation, warranty and other terms and conditions related to the leased assets;

2. Using the leased assets for the right purposes agreed in the financial leasing contract; not being entitled to sell and transfer the use right of leased assets to other organizations and individuals, unless otherwise agreed by the lessor and the lessee in the financial leasing contract;

3. Providing information about the provider and making a quarterly report on the business and production activities, making the annual report on financial finalization and other issues related to the leased assets as required by the lessor, facilitating the lessor’s inspection of leased assets;

4. Making payment of rent and other expenses related to the leased terms under the provisions in the financial leasing contract;

5. Bearing all risk of loss of leased assets and expenses for maintenance, repairs, replacement of leased assets during the lease term and taking responsibility for all consequences resulting from the use of the leased asset caused to organizations and individuals in the process of using the leased assets.

6. Not removing, erasing or damaging the lessor’s sign of ownership attached on the leased assets;

7. No using the leased assets for mortgage, pledge or for assured performance of other obligations;

8. Making full payment of remaining rental and other expenses generated when the leased assets are lost, damaged and cannot be restored or repaired or upon the termination of financial leasing contract before maturity due to the lessee’s breach of terms and conditions as a basis for termination of contract as specified in the financial leasing contract;

9. Fully complying with the other terms and conditions specified in the financial leasing contract;

Article 21. Termination of financial leasing contract before maturity

1. The financial leasing contract can be terminated before its maturity upon occurrence of one of the following cases:

a) The lessee does not pay its rent or breach one of the other terms and conditions as a basis for termination of financial leasing contract as specified in this contract;

b) The lessee is declared bankrupt or dissolved;

c) The lessee breaches one of the other terms and conditions as a basis for termination of financial leasing contract as specified in this contract;

d) The leased assets are lost or damaged and cannot be restored or repaired;

dd) The lessor and the lessee have agreed to let the lessee pay all of the remaining rental before the lease term specified in the financial leasing contract;

2. The lessor and the lessee have specified in the financial leasing contract the termination of financial leasing contract under the provisions in Clause 1 of this Article;

Article 22. Settling the financial leasing contract terminated before maturity

1. Where the financial leasing contract is terminated before the maturity specified at Point a and b, Clause 1, Article 21 of this Decree, the lessee must pay all remaining rental. If the lessess cannot pay this rental, the lessor shall settle the leased assets as follows:

a) The lessee shall send a written notice to the lessee, People’s Committee and police organ where the lessee’s head office or leased assets are located of the recovery of leased assets and request these organs within their functions, duties and powers to take measures provided for by law to maintain the security and order during the process of recovery of leased assets to ensure that the lessor shall exercise the rights of owner over its leased assets; conduct the recovery of leased assets immediately ( except for the case where the leased assets are the objects or exhibits of a criminal case to be handled under the regulations of criminal law); obligatorily make a loan to the lessee for settlement of expenses to recover the leases assets when the lessee breaches the financial leasing contract and does not hand over assets voluntarily;

b) The lessee must stop using and handing over the leased assets to the lessor as required by the lessor and must not have any obstruction for the recovery of leased assets or continue to occupy or use the leased assets; make payment of remaining rental under the provisions of financial leasing company and other expenses related to the recovery of leased assets; obligatorily accept the loan from the lessor for settlement of expenses to recover the leased assets when the lessee breaches the financial leasing contract and does not hand over assets voluntarily;

2. Where the financial leasing contract is terminated before its maturity specified at Point c, dd, Clause 1, Article 21 of this Decree, the provisions of financial leasing contract shall apply;

3. Where the financial leasing contract is terminated before its maturity specified at Point d, Clause 1, Article 21 of this Decree:

a) When the leased assets are lost and cannot be restored, the lessor must send a written notice to the local authority where the lesse locates its head office or leased assets of the loss or damage of leased assets and the failure of restoration and request the application of measures within the authority as provided for by law to ensure the lessor shall exercise the rights of owner over its leased assets; send a written notice to the lessee of the recovery of damaged assets and the require the lessee to pay all of the remaining rental under the provisions of financial leasing contract and all expenses related to the recovery of leased assets;

b) The lessee must hand over the leased assets damaged as required by the lessor and pay all of the remaining rental to the lessor under the provisions of financial leasing contract and all expenses related to the recovery of leased assets;

Article 23. Certificate of ownership of leased assets

During the lease term, the lessor shall keep the original of Certificate of ownership of leased assets, the lessee may use the copy certified by the competent authority in legal relations concerning the use of assets;

Article 24. Registration of financial leasing contract

The registration of financial leasing contract shall comply with regulations of law;

Chapter 4.

IMPLEMENTATION PROVISION

Article 25. Transitional provision

1. Within 12 months, from the effective date of this Decree, the financial company and the financial leasing company that have been established and are operating under the Permit issued by the State Bank before the effective date of this Decree must ensure all conditions specified for the conditional activities as provided for by this Decree;

2. Within 18 months, from the effective date of this Decree, the consolidated financial company and the financial company for consumer credit and the financial leasing company that have been established and are operating under the Permit issued by the State Bank before the effective date of this Decree must stop their activities as provided for by this Decree;

3. For the financial leasing contracts and loan contracts signed before the effective date of this Decree, the financial leasing company and its customers shall continue signed agreements to the end of term of financial leasing contracts and loan contracs. The modification or addition of financial leasing contract of financial leasing contracts and loan contracts mentioned above is only done if the contents of modification or addition are consistent with the provisions of this Decree;

4. For the financial leasing contracts signed before the effective date of this Decree, in which the leased assets are boats used for domestic and international routes, the lessee may keep and use the original of Certificate of ownership of leased assets in international legal relations concerning the the use of assets, the lessor keeps the copy of Certificate of ownership of leased assets with certification of the competent authority;

5. The State Bank shall guide the transition of financial leasing company specified in Clause 1 and 2 of this Article;

Article 26. Responsibility of Ministries and sectors

1. Ministry of Public Security, Ministry of Justice and Ministry of Transport, based on their functions and duties, shall guide or coordinate to guide or define the issue and use of Certificate of ownership of leased assets for the leases assets and the use of copy of Certificate of ownership of leased assets for the leased assets, ownership registration for leased assets and ensure the rights of owner of lessee for the leased assets during the lease term;

2. Ministry of Justice shall, based on its functions and duties, guide or coordinate with the State Bank and the Ministries and sectors concerned to guide the registration of financial leasing contract;

3. Ministry of Justice, Ministry of Public Security, State Bank and local governments concerned, based on their functions and duties, shall guide or coordinate to guide the recovery and setlement of leased assets;

4. People’s Committee and police organ where the lessee locates its head office or leased assets, within their functions, duties and powers, shall apply measures provided for by law to maintain security and order during the recovery of leased assets and ensure the lessor exercises the rights of owner of leased assets;

Article 27. Effect

1. This Decree takes effect on June 25, 2014;

2. This Decree supersedes Decree No. 79/2002/ND-CP dated October 04, 2002 of the Government on organization and operation of financial leasing company, Decree No. 81/2008/ND-CP dated July 29, 2008 of the Government on amendment and addition of a number of Decree No. 79/2002/ND-CP dated October 04, 2002 of the Government on organization and operation of the financial company, Decree No. 16/2001/ND-CP dated May 02, 2001 of the Government on organization and operation of financial leasing company, Decree No. 65/2005/ND-CP dated May 19, 2005 of the Government on amendement and addition of a number of articles of Decree No. 16/2001/ND-CP dated May 02, 2001 of the Government on organization and operation of financial leasing company and Decree No. 95/2008/ND-CP dated August 25, 2008 of the Government on amendement and addition of a number of articles of Decree No. 16/2001/ND-CP dated May 02, 2001 of the Government on organization and operation of financial leasing company;

Article 28. Responsibility for implementation

Ministers, heads of ministerial-level agencies, heads of government-attached agencies and Chairman of People's Committee of provinces and centrally affiliated cities and the subject specified in Article 2 of this Decree are liable to execute this Decree.

 

 

 

FOR THE GOVERNMENT
PRIME MINISTER




Nguyen Tan Dung

 

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