Dossiers, order and procedures for applying for a license of a financial leasing company in the form of a joint stock company

According to what regulations is a financial leasing company established? What are the steps and procedures for applying for an establishment and operation license? For a financial leasing company established as a joint stock company, what do the documents include?

1. According to what regulations is a financial leasing company established?

Clause 4, Article 4 of the Law on Credit Institutions 2010 stipulates:

Non-bank credit institutions is a type of credit institution that is allowed to carry out one or several banking activities according to the provisions of this Law, except for activities of receiving deposits from individuals and providing payment services through customer accounts. Non-bank credit institutions include financial companies, financial leasing companies and other non-bank credit institutions.

According to the above regulations, a financial leasing company is a type of non-bank credit institution. Therefore, the order and procedures for establishing a financial leasing company are carried out in accordance with the regulations on organization and establishment of non-bank credit institutions.

2. What are the steps and procedures for granting an operating license to a financial leasing company?

According to the provisions of Article 8 of Circular 30/2015/TT-NHNN, the order and procedures for granting a license include the following steps:

(1) The Preparatory Committee prepares a dossier to request a License according to the provisions of Article 13, Article 14, Clauses 1, 2, 3, Article 15, Clauses 1, 2, 3, 4, 5, 6, Article 16 of this Circular and sends it by post or submits directly to the State Bank.

Within 30 days from the date of receiving the application for a License, the State Bank may Document sent to the Preparatory Committee confirming receipt of all valid documents for consideration and in-principle approval. In case the license application documents are incomplete, the State Bank will send a document to the Preparatory Committee requesting additional documents.

(2) Within 90 days from the date of sending the written confirmation of receipt of all valid documents, the State Bank shall issue a written approval in principle for the establishment of a non-bank credit institution. In case of disapproval, the State Bank will respond in writing, clearly stating the reason for disapproval.

(3) Within 60 days from the date of receiving the document approving the principles of establishing a non-bank credit institution, the Preparatory Committee shall prepare additional documents as prescribed in Clause 4, Article 15, Clause 7, Article 16 of this Circular and send them by post or submit directly to the State Bank. Past the above time limit, if the State Bank does not receive or incompletely receives the above documents, the in-principle approval document is no longer valid.

Within 05 working days from the date of fully receiving the additional documents, the State Bank confirms in writing the receipt of all documents.

(4) Within 30 days from the date of receipt of all additional documents, the State Bank shall issue the License according to regulations. In case the License is not granted, the State Bank will respond in writing, clearly stating the reason for not granting the License.

Accordingly, the order and procedures for granting a License to this non-bank credit institution automatically apply to the financial leasing company

3. What are the components of the dossier to request a License for a joint stock financial leasing company?

General dossier to request a License: stipulated in Article 14 Circular 30/2015/TT-NHNN, amended by Clause 3, Clause 4 Article 1 Circular 15/2016/TT-NHNN, supplemented by Clause 5 Article 1, Clause 1 Article 2 Circular 05/2023/TT-NHNN (Effective from date August 6, 2023) including:

General license application file

1. Application for a License signed by founding shareholders, owners, founding members according to the form specified in Appendix No. 01 of this circular.

2. Draft Charter of the non-bank credit institution approved by the Establishment Conference or approved by the owner.

3. The project to establish a non-bank credit institution (except for the cases specified in Clause 3a of this Article) passed by the Establishment Conference or approved by the owner, includes at least the following contents:

a) Necessity of establishment;

b) Name of non-bank credit institution proposed to be established, type, name of province/city where the head office is expected to be located, duration of operation, charter capital upon establishment, content of operations and ability to meet banking operating conditions prescribed for the type of non-bank credit institution proposed to be established according to the provisions of Decree No. 39/2014/ND-CP dated May 7, 2014 of the Government on the operations of financial companies. Government and financial leasing companies (hereinafter referred to as Decree No. 39/2014/ND-CP)

c) Financial capacity of founding shareholders, founding shareholders, owners, founding members, capital contributing members;

d) Organization chart and expected operational network for the first 3 years;

d) List of expected personnel, which describes in detail professional qualifications and work experience in the fields of finance, banking and risk management to meet the requirements of each position and title:

(i) Chairman, member, independent member of the Board of Directors, Board of Members; Head of Committees under the Board of Directors and Board of Members;

(ii) Head, member, full-time member of the Supervisory Board;

(iii) General Director (Director), Deputy General Directors (Deputy Directors), Chief Accountant and heads of affiliated units in the organizational structure;

e) Risk management policy: Identify, measure, prevent, manage and control credit risk, operational risk, market risk, liquidity risk and other risks during operations;

g) Information technology:

(i) Information technology system investment plan, which explains the information technology system expected to be invested to ensure it meets the requirements for governance, risk management of non-bank credit institutions and regulations of the State Bank;

(ii) Time to implement technology investment; type of technology expected to be applied; expected staff and staff’s ability to apply information technology; ability to integrate and connect with the State Bank’s management system to provide information according to the State Bank’s management requirements; ensure the information technology system supports an effective management information system;

(iii) Records of information technology systems serving operations;

(iv) Solutions to ensure safety and security in accordance with the activities expected to be deployed;

(v) Identify, measure and manage risks for the technology expected to be applied;

(vi) Expected assignment of responsibilities for reporting and controlling information technology system operations news;

h) Ability to develop sustainably in the market:

(i) Analyze and evaluate the market, stating the current situation, challenges and prospects;

(ii) Ability to participate and compete in the market, which demonstrates advantages when entering the market;

(iii) Strategy develop and expand the operational network and content of banking activities and customers, including detailed analysis of meeting the conditions for conditional operational contents;

i) Internal control and audit system:

(i) Operating principles of the internal control system;

(ii) Draft of internal regulations basic organization and operation of non-bank credit institutions, including at least the internal regulations specified in Clause 2, Article 93 of the Law on Credit Institutions and the following regulations:

– Regulations on the organization and operation of the Board of Directors, Board of Members, Supervisory Board, Executives;

– Regulations on the organization and operation of headquarters, branches and other affiliated units;

(iii) Content and operational process of internal audit;

k) Expected business plan for the first 03 years, which must at least include the following contents: Market analysis, strategy, goals and business plan; Expected financial statements of each year (balance sheet, business results report, cash flow report, minimum capital adequacy targets, performance indicators and explanation of the ability to implement financial targets in each year).

3a. The project to establish a non-bank credit institution approved by the owner includes at least the contents specified in Clause 3 of this Article (except points a and c) in case the owner is a commercial bank subject to compulsory transfer.

4. Documents proving the capacity of the expected management, control and operating apparatus:

a) Curriculum vitae according to the form specified in Appendix No. 02 of this Circular; Criminal record card:

For people with Vietnamese nationality: Judicial record card issued by the agency managing the judicial record database, which must contain full information on criminal record status (including expunged and unexpunged criminal records) and information on prohibitions from holding positions, establishing and managing businesses and cooperatives;

For people without Vietnamese nationality: Judicial record card or document of equivalent value (with full information on criminal record status, including expunged and unexpunged criminal convictions; information on bans from holding positions, establishing and managing businesses and cooperatives) must be issued by competent Vietnamese agencies or foreign competent agencies according to regulations;

A judicial record card or document of equivalent value must be issued by a competent authority no more than 06 (six) months before the time of submitting the application for a License;

b) Copies of diplomas proving professional qualifications;

c) Other documents proving satisfaction of conditions and standards as prescribed in the Law on Credit Institutions and relevant legal regulations;

d) In case the person expected to be elected as a member of the Board of Directors, Board of Members, member of the Supervisory Board, General Director (Director) does not have Vietnamese nationality, in addition to the documents mentioned above, there must be a written commitment to meet all the conditions to reside and work in Vietnam.

5. Minutes of the Establishment Conference or document of the owner approving the draft Charter, project for establishing a non-bank credit institution, list of expected management, control, and executive positions and selection of the Preparatory Committee and Head of the Preparatory Committee.

Thus, the establishment of a financial leasing company in the form of a joint stock company is carried out according to the order, procedures and components of legal documents for non-bank credit institutions.

Separate records for joint stock financial leasing companies: Clauses 2, 3 and 4 Article 15 Circular 30/2015/TT-NHNN, amended by Clause 4, Clause 5 Article 1, Clause 5 Article 2 Circular 01/2019/TT-NHNN, amended by Clause 6 Article 1 Circular 05/2023/TT-NHNN (Effective from August 6, 2023) including:

Application file for License for joint-stock non-bank credit institutions

1. Document composition as prescribed in Article 14 of this Circular.

2. List of founding shareholders and capital contributing shareholders according to the form specified in Appendix No. 03 of this Circular.

3. Profile of shareholders contributing capital to establish:

a) For individuals:

(i) Share purchase application according to the form specified in Appendix No. 04A of this Circular;

(ii) Declaration of related persons according to the form specified in Appendix No. 05 of this Circular;

b) For individuals who are founding shareholders:

(i) Documents specified in point a of this clause;

(ii) Curriculum vitae according to the form specified in Appendix No. 02 of this Circular; Judicial record card issued by the agency managing the judicial record database, which must contain full information on criminal record status (including expunged and unexpunged criminal records) and information on prohibitions from holding positions, establishing and managing businesses and cooperatives;

The judicial record card must be issued by a competent authority no more than 6 (six) months before the time of submitting the application for a License;

(iii) Declaration of information about the individual’s credit relationship history according to the form specified in Appendix No. 06 of this Circular;

c) For organizations:

(i) Share purchase application according to the form specified in Appendix No. 04B of this Circular;

(ii) Declaration of related persons according to the form specified in Appendix No. 05 of this Circular;

(iv) Authorization document for representative of capital contribution at non-bank credit institution according to the provisions of law;

(v) Copy of Charter of organization and operations;

(vii) Document from the competent authority approving the organization contributing capital to establish a non-bank credit institution;

(viii) The financial statements of the year immediately preceding the year of submitting the application for the License and the financial statements up to the latest date from the date of submitting the application for the License are audited by an independent auditing organization with no exception. In case at the time of submitting the application for a License there is no audited financial report, the unaudited financial report must be submitted and the audited financial report must be submitted immediately after the auditing organization releases the audit report and must be responsible for the content of the submitted financial report;

(ix) Report on the financial ability to contribute capital to establish a non-bank credit institution of an organization that is not a commercial bank according to the form specified in Appendix No. 08 of this Circular;

(x) Document from the tax authority and social insurance agency confirming the full implementation of tax and social insurance obligations of the organization organization;

d) For organizations that are founding shareholders:

(i) Documents specified in point c of this clause;

(ii) Curriculum vitae according to the form specified in Appendix No. 02 of this Circular; Judicial record card of the legal representative, the person appointed to represent the organization’s capital contribution at a non-bank credit institution as prescribed in Point a, Clause 4, Article 14 of this Circular

(iii) Declaration of information about the organization’s credit relationship history according to the form specified in Appendix No. 07 of this Circular;

(v) Financial statements for 03 years immediately preceding the year of submitting the application for the License has been audited by an independent auditing organization and has no exception opinions. In case at the time of submitting the application for a License there is no audited financial report of the preceding year, the unaudited financial report must be submitted and the audited financial report must be submitted immediately after the auditing organization releases the audit report and must be responsible for the content of the submitted financial report.

4. After receiving the in-principle approval document, the Preparatory Committee must submit the following additional documents to be considered for issuance of the following License:

a) Charter of the non-bank credit institution approved by the Established Congress;

b) Minutes and Resolution of the Establishment Congress on approving the Charter, electing members of the Board of Directors, members of the Control Board, regulations on organization and activities of the Board of Directors and Supervisory Board;

c) Minutes of the meeting of the Board of Directors on the election of Chairman of the Board of Directors; Minutes of the meeting of the Supervisory Board on the election of Head of the Supervisory Board and full-time members of the Supervisory Board;

d) Decision of the Board of Directors on the appointment of General Director (Director), Deputy General Director (Deputy Director), Chief Accountant;

dd) Document of a Vietnamese commercial bank where the Preparatory Committee opened a capital contribution account confirming the capital contribution amount of contributing shareholders established capital;

e) Document proving ownership or legal right to use the location of the head office;

g) Internal regulations on the organization and operation of non-bank credit institutions specified in Point i(ii) Clause 3 Article 14 of this Circular have been established by the Congress and approved by the Board of Directors;

h) Report of founding shareholders who are Vietnamese commercial banks and Vietnamese enterprises on compliance with the provisions of Clause 4, Article 11 of this Circular from the time of submitting the application for License to the time of submitting additional documents to be considered for License. (amended by clause 6, Article 1 Circular 05/2023/TT-NHNN (Effective from August 6, 20230)