Quyết định 30/2008/QD-NHNN

DECISION

ON THE AMENDMENT, SUPPLEMENT OF SEVERAL ARTICLES OF THE REGULATION ON FACTORING ACTIVITY OF CREDIT INSTITUTIONS, ISSUED IN CONJUNCTION WITH THE DECISION NO. 1096/2004/QD-NHNN DATED 6 SEPTEMBER 2004 OF THE GOVERNOR OF THE STATE BANK

THE GOVERNOR OF THE STATE BANK

- Pursuant to the Law on the State Bank of Vietnam issued in 1997 and the Law on the amendment, supplement of several articles of the Law on the State Bank of Vietnam issued in 2003;
- Pursuant to the Law on Credit Institutions issued in 1997; and the Law on the amendment, supplement of several articles of the Law on Credit Institutions issued in 2004;
- Pursuant to the Law on Enterprises in 2005;
- Pursuant to the Decree No. 16/2001/ND-CP dated 2 May 2001 of the Government on organization and operation of finance leasing companies;
- Pursuant to the Decree No. 95/2008/ND-CP dated 25 August 2008 of the Government on amendment, supplement of several articles of the Decree No. 16/2001/ND-CP dated 2 May 2001 on organizations and operation of finance leasing companies;
- Pursuant to the Decree No. 96/2008/ND-CP dated 26 August 2008 of the Government providing for functions, duties, authorities and organizational structure of the State Bank of Vietnam;
- Upon the proposal of the Director of the Banks and Non-banking Credit Institution Department,

DECIDES:

Article 1. To amend, supplement several articles of the Regulation on factoring activity of credit institutions, issued in conjunction with the Decision No. 1096/2004/QD-NHNN dated 6 September 2004 of the Governor of the State Bank (hereinafter referred to as Regulation on factoring activity) as follows:

1. Terms provided for in the Regulation on factoring activity shall be amended as follows:

- "Goods purchase and sale contract" is changed into "Contract of goods purchase, sale and services supply"

- "Goods purchase, sale" is changed into "Goods purchase, sale and services supply"

- "Sale document" is changed into "document on goods purchase, sale and services supply"

- "Buying party" is changed into "Goods buyer and services user"

- "Selling party" is changed into "goods seller and services supplier"

2. Paragraph 2, Article 1 shall be amended, supplemented as follows:

"2. Subjects of application

2.1. Credit institutions which engage in factoring operation, include:

a. Credit institutions established and operating in accordance with the Law on credit institutions:

- State owned commercial bank;

- Joint stock commercial bank;

- Joint venture bank;

- 100% foreign owned bank;

- Finance company;

- Finance leasing company;

b. Foreign banks authorized to open branch in Vietnam in accordance with the Law on credit institutions

2.2. Customers to which credit institutions provide factoring service shall be Vietnamese and foreign economic organizations selling goods, supplying services (hereinafter referred to as selling party) and being beneficiary of receivables arising from the sale of goods, supply of services in accordance with the agreement made by and between the selling party and goods buyer and services user (hereinafter referred to as buying party) in the contract of goods purchase, sale and services supply. Finance leasing company shall only be entitled to provide factoring service to customers who are its lessees."

3. Article 7 shall be amended, supplemented as follows:

"b. Their overdue debt at the end of each month in the latest 3 months is less than 5% of the total outstanding loans; they do not violate any provision on prudential ratios in banking operation"

"3. Finance leasing company shall only be entitled to perform factoring activity when its charter capital is equivalent to the legal capital as provided for Finance Company."

4. Paragraph 3 shall be supplemented to Article 8 as follows:

"3. Documents contained in the application file must be the originals, in case of copies, they must be certified by agencies which issued the originals or notarized by competent authorities in accordance with provisions of applicable laws."

5. Article 10 shall be amended, supplemented as follows:

"2. Credit institutions must submit issued editions of paper, copy of the business registration certificate, notarized by competent agency and other related documents.

3. Within a period of 6 months since obtaining the written consent from the State Bank, credit institution shall be obliged to carry out factoring activity. After stipulated period, the written consent of the State Bank shall cease its effectiveness if credit institution does not carry out factoring activity."

6. Point d, dd, e, Paragraph 1 of Article 13 shall be amended as follows:

"d. The selling party shall give a written notice of factoring contract to the buying party and related parties, which clearly states the fact that the selling party has transferred its right to claim the debt to the factoring unit and provides the buying party with guidance on making payment to the factoring unit;

dd. The buying party shall send the selling party and the factoring unit a written confirmation of its receipt of the notice and commitment on the performance of its payment obligation to the factoring unit. Where the buying party does not make written commitment on the performance of its payment obligation to the factoring unit, then the two parties shall decide on the continuous performance of the factoring activity between the selling party and the factoring unit and take self-responsibilities for any potential risk.

e. The selling party shall hand over the list together with the original of the contract of goods purchase, sale and services supply, documents on goods purchase, sale and services supply and other documents concerning receivables to the factoring unit. In case of copies of the above mentioned documents, notarized by competent agency, the selling party and factoring unit shall agree upon and take self-responsibilities for their decision upon arising any risk;"

7. Paragraph 8 and Paragraph 9 shall be supplemented to Article 19 as follows:

"8. Receivables arising from the contract of services supply in construction area; finance- banking area in accordance with the attached appendix;

9. Contract of goods purchase, sale and services supply which contains an agreement of not handing over rights and obligations in the contract"

8. Article 23 shall be amended and supplemented as follows:

- To amend Point b, Paragraph 1: "Entitled to request the selling party to hand over the entire list together with the originals or copies, notarized by competent agency, of contract of goods purchase, sale and services supply, documents on goods purchase, sale and services supply, rights, interests and documents related to the receivable to be factored;"

- To repeal Point a, Paragraph 2, Article 23;

9. Point d, Paragraph 2 of Article 24 shall be amended, supplemented as follows:

"d. To fully and timely hand over the entire list together with the originals (or copies notarized by competent agency) of the contract of goods purchase, sale and services supply, documents on goods purchase, sale and services supply; rights, interests and other documents relating to the receivable to be factored to the factoring unit in accordance with agreements stated in the factoring contract;

Article 2. This Decision shall be effective after 15 days since its publication in the Official Gazette.

Article 3. The Director of Administrative Department, Director of Banks and Non-banking Credit Institutions Department, Heads of units of the State Bank, General Managers of State Bank branches in provinces, cities under the central Government's management, Chairman and members of Board of Directors, Chief and members of Board of Controllers and General Directors (Directors) of credit institutions shall be responsible for the implementation of this Decision.

APPENDIX:
LIST OF FINANCE- BANKING SERVICES (*)

A. INSURANCE SERVICE AND INSURANCE RELATED SERVICES

1. Direct insurance (including co-insurance)

- Life insurance

- Non-life insurance

2. Re-insurance and reinsurance cession;

3. Insurance intermediary such as broker and agent;

4. Additional insurance services such as: consultancy, service of probability and risk assessment and claim settlement service.

B. BANKING SERVICE AND OTHER FINANCIAL SERVICES (EXCEPT FOR INSURANCE SERVICE)

1. Receiving deposit or advance deposit and other payable amounts from public

2. Providing loan in different forms, including consumer credit, mortgage credit, loan underwriting and commercial transactions financing;

3. Financial hire-purchase;

4. Every service of payment and money remittance, including credit card, payment card and debit advice, traveler's cheque and bank draft

5. Guarantee and commitment

6. Trading in their account and account of customers at operation department and OTC market or other transactions concerning

- Monetary market instrument (including cheque, deposit certificate)

- Foreign exchange

- Derivative financial products, including but unlimited to futures or options

- Exchange rate and interest rate based products, including such products as swaps, forward exchange rate contract;

- Negotiable securities

- Other negotiable instruments in financial assets, including precious metal

7. Taking part in the issuance of securities of different types, including underwriting and offering for sale as agent (publicly or under separate agreement) and providing services related to that issuance.

8. Providing monetary brokerage service

9. Managing assets such as cash or portfolio management, forms of collective investment management, pension fund management, service of preservation, maintenance and entrustment.

10. Providing services of payment and settlement of financial assets, including securities, derivative financial products and other payment instruments;

11. Providing services of consultancy, brokerage intermediary and other additional financial services related to activities as stated from point (1) to point (10), including credit reference and analysis, study, providing advices on investment and portfolio, providing advices on acquisition and enterprise's restructuring or strategy.

(*) Source: Based on basic legal documents issued by World Trade Organization (WTO) in 2007- from USAID and National Committee of international economic cooperation (page 245)