Is a fund management company covered by the regulations for credit institutions?

1. Is the fund management company covered by the regulations for credit institutions?

Pursuant to Clause 1, Article 4 of the Law on Credit Institutions 2010 as follows:

– A credit institution is an enterprise that carries out one, some or all banking activities. Credit institutions include banks, non-bank credit institutions, microfinance institutions and people’s credit funds.

Thus, according to the above regulations, there are no regulations on credit institution management. For fund management companies, it will be related to the Securities Law

2. What is the organizational form of a credit institution?

Pursuant to Article 6 of the Law on Credit Institutions 2010, regulations on the organizational form of credit institutions are as follows:

– Domestic commercial banks are established and organized in the form of joint stock companies, except for the cases specified in Clause 2 of this Article.

– State-owned commercial banks are established and organized in the form of a one-member limited liability company with 100% charter capital owned by the State.

– Domestic non-bank credit institutions are established and organized in the form of joint stock companies or limited liability companies.

– Joint venture credit institutions and 100% foreign-owned credit institutions are established and organized in the form of limited liability companies.

– Cooperative banks and people’s credit funds are established and organized in the form of cooperatives.

— Microfinance institutions are established and organized in the form of limited liability companies.

3. How is the right to operational autonomy regulated by law?

Pursuant to Article 7 of the Law on Credit Institutions 2010, regulations on operational autonomy are as follows:

– Credit institutions and foreign bank branches have autonomy in business operations and are responsible for their own business results. No organization or individual is allowed to illegally interfere with the business activities of credit institutions or foreign bank branches.

– Credit institutions and foreign bank branches have the right to refuse requests to grant credit or provide other services if found to be ineligible, ineffective, or not in accordance with the provisions of law.

4. Right to operate banking in accordance with the law

Pursuant to Article 8 of the Law on Credit Institutions 2010, regulations on the right to operate banks are as follows:

– Organizations that meet the conditions prescribed by this Law and other relevant laws and are licensed by the State Bank may conduct one or several banking activities in Vietnam.

– Individuals and organizations that are not credit institutions are strictly prohibited from carrying out banking activities, except for margin transactions and securities purchase and resale transactions of securities companies.

5. According to the law, who is the relevant person?

Pursuant to Clause 28, Article 4 of the Law on Credit Institutions 2010, supplemented by Clause 1, Article 1 of the Law on Credit Institutions Amended 2017, as follows:

An organization or individual that has a direct or indirect relationship with another organization or individual in one of the following cases:

+ Parent company with subsidiary and vice versa; credit institutions with subsidiaries of credit institutions and vice versa; Subsidiaries of the same parent company or the same credit institution; Managers, members of the Control Board of the parent company or credit institution, individuals or organizations with authority to appoint these people to the subsidiary and vice versa;

+ The company or credit institution with the manager or member of the Control Board of that company or credit institution or with the company or organization that has the authority to appoint those people and vice versa;

+ A company or credit institution with an organization or individual owning 5% or more of charter capital or voting share capital in that company or credit institution and vice versa;

+ Personally with this person’s wife, husband, father, mother, children, brothers, sisters;

+ A company or credit institution with an individual as prescribed in Point d of this Clause of a manager, member of the Control Board, capital contributing member or shareholder owning 5% or more of the charter capital or voting share capital of that company or credit institution and vice versa;

+ Individuals authorized to represent the organizations and individuals specified in Points a, b, c, d and dd of this Clause with the authorized organizations and individuals; individuals authorized to represent capital contributions of the same organization together.

+ Other legal entities and individuals with potentially risky relationships for the operations of credit institutions and foreign bank branches are determined according to the internal regulations of the credit institution and foreign bank branch or according to the written request of the State Bank through inspection and supervision activities for each specific case.