Licensing a Joint-Stock Financial Leasing Company: Dossier & Procedures in Vietnam

What regulations govern the establishment of a financial leasing company? What are the steps of the order and procedures for applying for a License for establishment and operation? For a financial leasing company established as a joint-stock company, what does the application dossier comprise?

1. What regulations govern the establishment of a financial leasing company?

Under the Law on Credit Institutions 2024 (No. 32/2024/QH15, effective from July 1, 2024, replacing the Law on Credit Institutions 2010), a financial leasing company is a type of non-bank credit institution that may carry out one or more banking operations as prescribed by this Law, except receiving deposits from individuals and providing payment services via customers’ accounts. Accordingly, the establishment of a financial leasing company requires the State Bank of Vietnam to issue a License for establishment and operation, following the order and procedures applicable to non-bank credit institutions.

2. What steps are included in the order and procedures for granting the Operating License to a financial leasing company?

Under Article 8 of Circular 30/2015/TT-NHNN, the order and procedures for granting the License include the following steps:

(1) The Founding Committee prepares the dossier applying for the License under Articles 13, 14, Clauses 1, 2 and 3 of Article 15, and Clauses 1, 2, 3, 4, 5 and 6 of Article 16 of this Circular and sends it by post or submits it directly at the State Bank of Vietnam.

Within 30 days from the date of receiving the dossier applying for the License, the State Bank of Vietnam sends a written confirmation to the Founding Committee confirming receipt of a complete and valid dossier for consideration of in-principle approval. Where the dossier applying for the License is incomplete, the State Bank of Vietnam sends a written request to the Founding Committee to supplement the dossier.

(2) Within 90 days from the date of sending the written confirmation of receipt of a complete and valid dossier, the State Bank of Vietnam issues a written in-principle approval for the establishment of the non-bank credit institution. Where approval is not granted, the State Bank of Vietnam replies in writing, clearly stating the reasons for non-approval.

(3) Within 60 days from the date of receiving the written in-principle approval for the establishment of the non-bank credit institution, the Founding Committee prepares the supplementary documents under Clause 4 of Article 15 and Clause 7 of Article 16 of this Circular and sends them by post or submits them directly at the State Bank of Vietnam. Beyond the above time limit, if the State Bank of Vietnam does not receive or receives incomplete such documents, the in-principle approval letter becomes invalid.

Within 05 working days from the date of receiving complete supplementary documents, the State Bank of Vietnam confirms in writing the receipt of complete documents.

(4) Within 30 days from the date of receiving complete supplementary documents, the State Bank of Vietnam grants the License as prescribed. Where the License is not granted, the State Bank of Vietnam replies in writing, clearly stating the reasons for not granting the License.

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

3. What does the dossier applying for the License for a joint-stock financial leasing company comprise?

Common dossier applying for the License: as prescribed in Article 14 of Circular 30/2015/TT-NHNN, as amended by Clauses 3 and 4 of Article 1 of Circular 15/2016/TT-NHNN, as supplemented by Clause 5 of Article 1 and Clause 1 of Article 2 of Circular 05/2023/TT-NHNN (Effective from August 6, 2023) comprises:

Common dossier applying for the License

1. Application for the License signed by founding shareholders, owners or founding members under the form 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. Establishment plan of the non-bank credit institution (except for the case specified in Clause 3a of this Article) approved by the Establishment Conference or approved by the owner, including at minimum the following contents:

a) Necessity of establishment;

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

c) Financial capacity of founding shareholders, capital-contributing shareholders for establishment, owners, founding members and capital-contributing members;

d) Organizational chart and planned operating network for the first 03 years;

đ) Planned personnel list, detailing professional qualifications, work experience in finance, banking and risk management satisfying the requirements of each position and title:

(i) Chairperson, members, independent members of the Board of Directors or Members’ Council; Heads of Committees under the Board of Directors or Members’ Council;

(ii) Heads, members and specialized members of the Supervisory Board;

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

e) Risk management policy: identification, measurement, prevention, management and control of credit risk, operational risk, market risk, liquidity risk and other risks during operation;

g) Information technology:

(i) Plan for investment in information technology systems, describing the planned information technology system to ensure satisfaction of the governance, risk management requirements of the non-bank credit institution and the regulations of the State Bank of Vietnam;

(ii) Timeline for technology investment; type of technology planned for application; expected personnel and their ability to apply information technology; ability to integrate and connect with the State Bank of Vietnam’s management system to provide information as required by the State Bank of Vietnam’s management; ensuring the information technology system supports an effective management information system;

(iii) Dossier on the information technology system serving operations;

(iv) Solutions to ensure safety and security appropriate to the planned scope of operations;

(v) Identification, measurement and management plans for risks of the technology planned for application;

(vi) Planned assignment of responsibility for reporting and controlling information technology system operations;

h) Ability for sustainable development in the market:

(i) Market analysis and assessment, stating the actual situation, challenges and prospects;

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

(iii) Development strategy, expansion of operating network and scope of banking operations, customer base, analyzing in detail satisfaction of the conditions for conditional scopes of operation;

i) Internal control and internal audit systems:

(i) Operating principles of the internal control system;

(ii) Draft basic internal regulations on the organization and operations of the non-bank credit institution, at minimum including the internal regulations under Clause 2 of Article 93 of the Law on Credit Institutions and the following:

– Regulations on the organization and operations of the Board of Directors, Members’ Council, Supervisory Board and Executives;

– Regulations on the organization and operations of the head office, branches and other subordinate units;

(iii) Contents and operating procedures of internal audit;

k) Planned business plan for the first 03 years, at minimum including the following contents: market analysis, strategy, objectives and business plan; projected financial statements for each year (balance sheet, income statement, cash flow statement, minimum capital adequacy ratio indicators, operational efficiency indicators and explanations on the feasibility of the financial indicators in each year).

3a. Establishment plan of the non-bank credit institution approved by the owner including at minimum the contents prescribed in Clause 3 of this Article (except points a and c) for the case where the owner is a commercial bank under mandatory transfer.

4. Documents evidencing the capacity of the planned governance, control and executive apparatus:

a) Curriculum vitae under the form in Appendix No. 02 of this Circular; judicial record card:

For persons of Vietnamese nationality: judicial record card issued by the agency managing the judicial record database, containing full information on criminal record status (including expunged and unexpunged criminal records) and information on prohibition from holding positions, establishing, managing enterprises and cooperatives;

For persons without Vietnamese nationality: judicial record card or document of equivalent value (containing full information on criminal record status, including expunged and unexpunged criminal records; information on prohibition from holding positions, establishing, managing enterprises and cooperatives) must be issued by a competent authority of Vietnam or a competent foreign authority as prescribed;

The judicial record card or document of equivalent value must be issued by a competent authority not more than 06 (six) months before the time of submitting the dossier applying for the License;

b) Copies of diplomas evidencing professional qualifications;

c) Other documents evidencing satisfaction of the conditions and standards under the Law on Credit Institutions and relevant legal provisions;

d) Where the persons planned to be elected as members of the Board of Directors or Members’ Council, members of the Supervisory Board, or General Director (Director) do not have Vietnamese nationality, in addition to the above documents, there must be a written commitment satisfying the conditions to reside and work in Vietnam.

5. Minutes of the Establishment Conference approving or written approval of the owner of the draft Charter, the establishment plan of the non-bank credit institution, the planned list of governance, control and executive positions and selection of the Founding Committee and Head of the Founding Committee.

Thus, the establishment of a financial leasing company as a joint-stock company is carried out under the legally prescribed order, procedures and dossier components for non-bank credit institutions.

Specific dossier for a joint-stock financial leasing company: Clauses 2, 3 and 4 of Article 15 of Circular 30/2015/TT-NHNN, as amended by Clauses 4 and 5 of Article 1 and Clause 5 of Article 2 of Circular 01/2019/TT-NHNN, as amended by Clause 6 of Article 1 of Circular 05/2023/TT-NHNN (Effective from August 6, 2023) comprises:

Dossier applying for the License for a joint-stock non-bank credit institution

1. Dossier components under Article 14 of this Circular.

2. List of founding shareholders and capital-contributing shareholders for establishment under the form in Appendix No. 03 of this Circular.

3. Dossier of capital-contributing shareholders for establishment:

a) For individuals:

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

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

b) For individuals who are founding shareholders:

(i) Dossier prescribed in point a of this Clause;

(ii) Curriculum vitae under the form in Appendix No. 02 of this Circular; judicial record card issued by the agency managing the judicial record database, containing full information on criminal record status (including expunged and unexpunged criminal records) and information on prohibition from holding positions, establishing, managing enterprises and cooperatives;

The judicial record card must be issued by a competent authority not more than 06 (six) months before the time of submitting the dossier applying for the License;

(iii) Declaration of personal credit relationship history under the form in Appendix No. 06 of this Circular;

c) For organizations:

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

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

(iv) Written authorization of the person representing the capital contribution at the non-bank credit institution as prescribed by law;

(v) Copy of the organization’s Charter;

(vii) Written document of the competent authority approving the organization to contribute capital for establishment of the non-bank credit institution;

(viii) Financial statements for the year immediately preceding the year of submitting the dossier applying for the License and financial statements up to the latest point before the dossier submission, audited by an independent audit firm with no qualified opinion. Where at the time of submitting the dossier applying for the License audited financial statements are not yet available, unaudited financial statements shall be submitted and the audited financial statements must be submitted immediately after the audit firm issues the audit report, and responsibility for the contents of the submitted financial statements must be borne;

(ix) Report on financial capacity to participate in capital contribution for establishment of the non-bank credit institution of an organization that is not a commercial bank, under the form in Appendix No. 08 of this Circular;

(x) Written confirmation of the tax authority and social insurance authority on full performance of tax and social insurance obligations of the organization;

d) For organizations that are founding shareholders:

(i) Dossier prescribed in point c of this Clause;

(ii) Curriculum vitae under the form in Appendix No. 02 of this Circular; judicial record cards of the legal representative and the person appointed to represent the organization’s capital contribution at the non-bank credit institution under point a of Clause 4 of Article 14 of this Circular

(iii) Declaration of credit relationship history of the organization under the form in Appendix No. 07 of this Circular;

(v) Financial statements for the 03 years immediately preceding the year of submitting the dossier applying for the License, audited by an independent audit firm with no qualified opinion. Where at the time of submitting the dossier applying for the License audited financial statements for the immediately preceding year are not yet available, unaudited financial statements shall be submitted and the audited financial statements must be submitted immediately after the audit firm issues the audit report, and responsibility for the contents of the submitted financial statements must be borne.

4. After receiving the in-principle approval letter, the Founding Committee must submit the following supplementary dossier for consideration of License granting:

a) Charter of the non-bank credit institution approved by the Establishment General Meeting;

b) Minutes and Resolution of the Establishment General Meeting on approving the Charter, electing members of the Board of Directors and members of the Supervisory Board, and regulations on the organization and operations of the Board of Directors and Supervisory Board;

c) Minutes of the Board of Directors meeting on electing the Chairperson of the Board of Directors; Minutes of the Supervisory Board meeting on electing the Head of the Supervisory Board and specialized members of the Supervisory Board;

d) Decisions of the Board of Directors on appointing the General Director (Director), Deputy General Directors (Deputy Directors) and Chief Accountant;

đ) Written confirmation of a Vietnamese commercial bank where the Founding Committee opens the capital contribution account, confirming the amounts of capital contributed by the capital-contributing shareholders for establishment;

e) Documents evidencing lawful ownership or use rights of the head office location;

g) Internal regulations on the organization and operations of the non-bank credit institution prescribed in point i(ii) of Clause 3 of Article 14 of this Circular, approved by the Establishment General Meeting and the Board of Directors;

h) Report of founding shareholders that are Vietnamese commercial banks or Vietnamese enterprises on compliance with the provisions in Clause 4 of Article 11 of this Circular from the time of submitting the dossier applying for the License to the time of submitting the supplementary dossier for consideration of License granting (amended by Clause 6 of Article 1 Circular 05/2023/TT-NHNN (Effective from August 6, 2023)