Gov’t sets financial regimes for credit institutionsAug 22, 2017 167
Credit institutions and foreign bank branches have autonomy in finance and must take responsibility for their business activities and fulfill their obligations and commitments as prescribed by law.
Decree No. 93/2017/ND-CP sets out four principles on capital contribution and share purchase by credit institutions__Photo: Internet
This is provided in Government Decree No. 93 dated August 7, stipulating financial regimes applicable to credit institutions and foreign bank branches, and financial supervision and assessment of effectiveness of state capital investment at credit institutions with wholly state-owned charter capital and credit institutions with state capital.
Decree 93 sets out four principles on capital contribution and share purchase by credit institutions. First, the capital contribution, share purchase and capital transfer of credit institutions must comply with the Law on Credit Institutions and relevant laws.
Second, a credit institution may only use its charter capital and reserve fund for contributing capital to and purchasing shares from businesses and other credit institutions in accordance with law.
Next, the competence to decide on plans to contribute capital to and purchase shares from businesses and other credit institutions and plans on transfer of invested capital must comply with law and the charter of credit institutions.
Credit institutions with wholly state-owned charter capital or with state capital must comply with the law on management and use of state capital invested in enterprises.
Last, a credit institution may not contribute capital to or purchase shares from businesses and other credit institutions being its shareholders or capital contributors.
Credit institutions and foreign bank branches must also manage and use capital and assets, distribute profits and carry out financial and accounting regimes in accordance with this Decree and other relevant laws.
Under Decree 93, credit institutions and foreign bank branches may purchase, sell and transfer their assets to recover capital for more efficient business.
The new law will take effect on September 25, 2017, and replaces Decree No. 57 dated July 20, 2012.