Fresh regulations on foreign strategic investors

Question: What is the rate of share a foreign strategic investor may hold in a Vietnamese credit institution? What are the new regulations on foreign strategic investors in Viet Nam?

Answer: A foreign strategic investor may hold 20% of the charter capital of a Vietnamese credit institution, according to Government’s Decree 01/2014/ND-CP, dated January 3, 2014. The decree would take effect from February 20, 2014.

Decree 01 adds financial joint stock companies and financial leasing companies to the list of organizations eligible to sell shares to foreign investors. This helps increase opportunities for foreign investors in Viet Nam.

Decree 01 maintains provisions on share ownership percentage of foreign investors as individuals and organizations.

However, a foreign investors’ share ownership percentage can be raised to under 15% of the charter capital of the Vietnamese credit institution. The level of share ownership of a foreign credit institution and its stakeholder shall not exceed 10% of the charter capital of a Vietnamese bank. The share ownership percentage of the foreign investor as an individual remains at less than 5% of the charter capital of a Vietnamese credit institution.

The total share ownership level of foreign investors cannot exceed 30% of the charter capital of a Vietnamese commercial bank.

Decree 01 stipulates the conditions applicable to foreign institutions purchasing shares with their stake from 10% upwards of the charter capital of the Vietnamese credit institutions without prescribing foreign investors as individuals.

The condition for the minimum total assets applicable to foreign investors as banks, financial companies and financial leasing companies is US$ 10 billion or having a minimum charter capital equivalent to US$ 1 billion applicable to foreign investors as other organizations in the adjoining year before the year to subscribe shares.

Under Decree 01, foreign strategic investors are foreign credit institutions including foreign banks, foreign financial companies and foreign financial institutions operating primarily and regularly in the banking sector./.