Hot Update: New Regulations on Capital Contribution and Share Purchase by Banks and Financial Companies from July 1, 2024

On June 28, 2024, the State Bank of Vietnam issued Circular 25/2024/TT-NHNN, which stipulates the conditions, documentation, procedures, and processes for approving capital contributions and share purchases by credit institutions.

Key Points of Circular 25/2024/TT-NHNN:

1. Commercial Banks:

Capital Contribution and Share Purchase to:

• Establish or acquire subsidiaries or affiliates in the domestic sectors of securities underwriting, securities brokerage, fund management and distribution, investment portfolio management, stock trading, insurance, debt management and asset exploitation, remittances, gold, intermediary payment services, and credit information.

• Acquire subsidiaries or affiliates in the domestic sectors of financial leasing, factoring, consumer credit, and credit card issuance.

2. Commercial Banks:

Capital Contribution and Share Purchase into Other Domestic Enterprises: This applies to sectors other than insurance, securities, remittances, gold, factoring, credit card issuance, consumer credit, intermediary payment services, and credit information.

3. General Financial Companies:

• Capital Contribution and Share Purchase to: Establish or acquire subsidiaries or affiliates operating in insurance, securities, debt management, and asset exploitation sectors.

• Specialized Financial Companies: Capital contribution and share purchase to establish or acquire subsidiaries or affiliates operating in the debt management and asset exploitation sectors.

Debt Conversion to Capital Contribution or Shares: For handling bad debts of commercial banks at domestic enterprises operating outside of insurance, securities, remittances, gold, factoring, credit card issuance, consumer credit, intermediary payment services, and credit information sectors.

For increasing capital in subsidiaries or affiliates, banks and financial companies must comply with the conditions stipulated in Article 8 of Circular 25/2024/TT-NHNN.

This Circular will take effect from July 1, 2024, replacing Circular 51/2018/TT-NHNN dated December 31, 2018.

Contact W&A for more detailed information!