Thông tư 30/2014/TT-NHNN

CIRCULAR

PROVIDING FOR OFFER AND ACCEPTANCE OF THE TRUSTEESHIP PERFORMED BY CREDIT INSTITUTIONS AND FOREIGN BANK BRANCHES

Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

Pursuant to the Law on Credit Institutions No. 47/2010/QH12 dated June 16, 2010;

Pursuant to the Government's Decree No. 156/2013/NĐ-CP dated November 11, 2013 defining the functions, tasks, entitlements and organizational structure of the State bank of Vietnam (hereinafter referred to as the State Bank);

At the request of the Chief of Banking Inspection and Supervision Department;

The Governor of the State Bank hereby promulgates this Circular on providing for trusteeship offer and acceptance performed by credit institutions and foreign bank branches.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of application

1. Credit institutions and foreign bank branches shall be only allowed to perform their trusteeship offer and acceptance in accordance with the provisions set forth in this Circular in respect of the following transactions or operations:

a) Lending;

b) Financial leasing;

c) Capital contribution and stock purchase;

d) Investment in production and business projects;

dd) Corporate bond purchase.

2. The trusteeship acceptance performed by credit institutions and foreign bank branches must comply with the Governmental regulations.

Article 2. Applicable entities

1. Credit institutions governed by this Circular shall encompass:

a) Commercial banks;

b) Vietnam Bank for Social Policies;

c) Cooperative banks;

d) Financial enterprises;

dd) Finance lease companies;

e) Microfinance institutions;

g) People's credit funds.

2. Foreign bank branches

3. Organizations that are not credit institutions and foreign bank branches in Vietnam (hereinafter referred to as organizations), and individuals who are residents and non-residents involved in trusteeship offer and acceptance transactions stipulated in this Circular.

Article 3. Interpretation of terms

In this Circular, terms shall be construed as follows:

1. Trust refers to a fiduciary relationship in which one party, known as a trustor who shall take all risks, gives another party, the trustee who shall be paid fiduciary fees, monetary assets to serve the purpose of performing transactions stipulated in Clause 1 Article 1 hereof with the trust beneficiary.

2. Trust beneficiaries refer to the entities that are entitled to trust assets, including:

a) Individuals, organizations, even inclusive of credit institutions and foreign bank branches who are clients taking out loans and those applying for capital leases;

b) Enterprises, credit institutions that receive paid-in capital, and issue bonds or stocks;

c) Production and business projects.

3. Loan trust refers to the trustor’s act of entrusting the trustee with the grant of loans to borrowers.

4. Finance lease trust refers to the trustor’s act of entrusting the trustee with the financing of leased assets to lessees.

5. Capital contribution and stock purchase trust refers to the trustor’s act of entrusting the trustee with the contribution of assets and purchase of stocks of enterprises and credit institutions.

6. Corporate bond purchase trust refers to the trustor’s act of entrusting the trustee with the purchase of corporate bonds, inclusive of convertible bonds.

7. Production and business project investment trusteeship refers to the financial company’s acting as the fiduciary for investors who invest their assets in production and business projects as agreed upon in the business cooperation contract.

8. Trust term refers to the period of time that begins on the date when the trustee commences performing their fiduciary duties and ends on the date when such fiduciary duties have been completely fulfilled as agreed upon in the trust agreement.

9. Trust property refers to the sum of money that the trustor entrusts to the trustee for the performance of fiduciary duties.

10. Trust fee refers to the sum of money that the trustor pays to the trustee for the performance of fiduciary duties as specified in the trust agreement, which must conform to legal regulations.

Article 4. Trust principles

1. The trust must be established in writing and must conform to provisions enshrined in this Circular and other relevant laws.

2. The trustor shall be only entitled to form a fiduciary relationship with the trustee in which the trustor is allowed to offer the trusteeship in accordance with laws; the trustee shall be only entitled to form a fiduciary relationship with the trustor in which the trustee is allowed to accept the trusteeship in accordance with laws.

3. The trustee shall not be permitted to delegate the trusteeship to the third party.

4. The distribution of trust property must be aligned with the progress in performing fiduciary duties.

5. The trustee shall not be permitted to misuse the trust property and breach their contractual fiduciary duties as agreed upon in the trust agreement.

6. Credit institutions and foreign bank branches that place trust in other credit institutions, foreign bank branches and organizations must compute the balance of entrusted accounts identified within the safety limits and ratios for transactions performed by credit institutions and foreign bank branches in accordance with regulations laid down by the State Bank.

7. Foreign bank branches shall be entrusted by the parent banks or bank branches in host countries with the grant of loans and purchase of bonds in accordance with regulations laid down in this Circular and laws on foreign loan, debt repayment, exchange management as well as other relevant laws.

8. Entrusted assets in foreign currencies must conform to the legal regulations on foreign exchange management and other relevant laws.

9. Credit institutions and foreign bank branches being trustors must carry out the debt classification and set aside contingency funds for risk management in accordance with the State Bank’s regulations on the balance of the trustor’s assets held in trust.

Credit institutions and foreign bank branches being trustees shall not be required to carry out the debt classification and set aside contingency funds for risk management in accordance with the State Bank’s regulations on the balance of the trustee’s assets held in trust.

10. With regard to the outward entrustment, credit institutions and foreign bank branches shall be only entitled to entrust banks and fund management companies in overseas countries with the performance of several transactions stipulated in Clause 1 Article 1 hereof within the scope of permitted operations of credit institutions and foreign bank branches pertaining to the foreign exchange that occurs on the international market, as prescribed in the State Bank’s regulations.

Article 5. Trust agreement

1. Trust agreement must consist of at least the following information:

a) Name and address of the trustor and trustee;

b) Trust beneficiary: Provision of real name or accurate information that helps identify the trust beneficiary must be closely regulated.

With respect to the stock purchase trust, apart from regulations on provision of real name or accurate information that helps identify the issuers, type and term of bonds must be strictly regulated;

c) Fiduciary purpose;

d) Fiduciary scope, terms and conditions;

dd) Trust term;

e) Fiduciary fee;

g) Trust property; the time of transferring the trust property;

h) Agreed currencies used for the trust (if any);

i) Rights and obligations of the trustor and trustee, which must clearly mandate that the trustor shall take all risks and be entitled to the benefit or interest of the trust, and the trustee shall be entitled to trust fees;

k) Premature contract termination;

l) Dispute settlement.

2. In addition to the information mentioned in Clause 1 of this Article, the trust agreement can enclose other information agreed by contracting parties in conformity with regulations laid down in this Circular and relevant laws.

Article 6. Rights and obligations of the trustor

1. The trustor shall be vested with the following rights:

a) Request the trustee to provide documentary evidences proving that the trustee has obtained permission to offer or accept the trusteeship in accordance with laws;

b) Request the trustee to report and provide necessary materials and information about the status and result of trust agreement execution;

c) Supervise and inspect the compliance of the trustee with their fiduciary duties and scope defined in the trust agreement;

d) Exercise other rights in accordance with provisions enshrined in the trust agreement and laws.

2. The trustor shall take on the following obligations:

a) Consider, assess function, scope, competence in management, administration, personnel, skills and qualifications, technology and infrastructural system of the trustee with the aim of ensuring the trustee is eligible to administer the trust and accept the trusteeship;

b) Transfer the title to or ownership of property held in trust to the trustee in accordance with the contractual progress of fiduciary duty performance as agreed upon in the trust agreement;

c) Provide the trustee with information and materials pertaining to their fiduciary duties agreed in the trust agreement;

d) Pay fiduciary fees to the trustee as agreed upon in the trust agreement;

dd) Secure other obligations in accordance with provisions enshrined in the trust agreement and laws.

Article 7. Rights and obligations of the trustee

1. The trustee shall be vested with the following rights:

a) Refuse any of requirements of the trustor pertaining to scope, terms and conditions of the trust, or those of the trust beneficiary which is not agreed in the trust agreement, or infringes upon legal regulations;

b) Receive fiduciary fees in accordance with terms and conditions of the trust agreement;

c) Request the trustor to provide necessary information and materials pertaining to the terms and conditions agreed upon in the trust agreement;

d) Exercise other rights in accordance with provisions enshrined in the trust agreement and laws.

2. The trustee shall take on the following obligations:

a) Consider, assess functions and scope of the trustor in order to ensure that the trustor is permitted to offer or accept the trusteeship in accordance with legal regulations;

b) Conform to fiduciary duties and scope as agreed upon in the trust agreement;

c) Examine and inspect the trust beneficiary’s use of trust property in conformity of terms and conditions of the trust agreement;

d) Inform the trustor about the performance of fiduciary duties in a timely and sufficient manner as agreed upon in the trust agreement;

dd) Transfer all of the legal benefits and related documents to the trustor as agreed upon in the trust agreement.

In case the trust agreement is terminated prematurely, the trustee shall pay the entrusted sum of money that remains undisbursed, and transfer all of the legal benefits and documents pertaining to the date on which the trust agreement is terminated prematurely, to the trustor as agreed upon in the trust agreement;

e) Secure other obligations in accordance with provisions enshrined in the trust agreement.

Article 8. Requirements for the offer and acceptance of the trusteeship to/from credit institutions and foreign bank branches

Credit institutions and foreign bank branches are eligible for the offer and acceptance of the trusteeship if they can meet the following requirements:

1. Trusteeship offer and acceptance transactions must be specified in the permit for their establishment and operation.

2. They are required to set out the internal rules on management of trusteeship offer and acceptance transactions under which risks to such transactions must be identified, weighed and managed in conformity with the operating characteristics and scope of these credit institutions and foreign bank branches.

3. All risks incurred from the trusteeship offer and acceptance transactions must be managed by a risk management unit.

4. The trustee must provide necessary facilities, network and staff of professional, skilled and well-trained personnel that are required to fulfill their fiduciary duties.

5. If credit institutions and foreign bank branches receive the trust property from organizations and individuals, which are invested in production and business projects, or are used for finance leasing and lending purposes, in addition to requirements regulated from Clause 1 to Clause 4 of this Article that must be satisfied, it is essential to ensure that, right at the time when the fiduciary relationship is formed, organizations and individuals being trustors do not have any outstanding debt obligations to these credit institutions and foreign bank branches.

Chapter II

 OFFER AND ACCETANCE OF THE TRUSTEESHIP TO/FROM CREDIT INSTITUTIONS AND FOREIGN BANK BRANCHES

Article 9. Cases in which trusteeship offer and acceptance are prohibited

1. Credit institutions and foreign bank branches shall not be allowed to establish the fiduciary relationship with trust beneficiaries ineligible for the credit extension stipulated in Article 126, 127 of the Law on Credit Institutions and the State Bank’s regulations on safety limits and ratio for transactions of credit institutions and foreign bank branches.

2. Commercial banks, foreign bank branches, cooperative banks, people's credit funds, microfinance institutions shall not be allowed to offer and accept the trusteeship for capital leases.

3. Credit institutions (exclusive of commercial banks), foreign bank branches shall not be entitled to offer and accept the trusteeship for capital contribution and stock purchase.

Commercial banks shall not be allowed to offer and accept the trusteeship for capital contribution and stock purchase to/from trust beneficiaries ineligible for such transactions stipulated in Clause 5 Article 129 of the Law on Credit Institutions and the State Bank’s regulations on safety limits and ratio for transactions of credit institutions and foreign bank branches.

4. Credit institutions (exclusive of financial companies) and foreign bank branches shall not be allowed to offer and accept the trusteeship for investments in production and trading projects.

5. Financial companies, finance lease enterprises, cooperative banks, people's credit funds and microfinance institutions shall not be allowed to offer and accept the trusteeship for corporate bond purchase.

6. Credit institutions and foreign bank branches shall not be allowed to offer and accept the trusteeship for purchase of bonds to/from other credit institutions and foreign bank branches.

Article 10. Offer and acceptance of the trusteeship to/from commercial banks

1. Commercial banks shall be entitled to offer their trusteeship to:

a) Other commercial banks, foreign bank branches, financial companies for the purpose of granting loans to clients;

b) Cooperative banks for the purpose of granting loans to clients who are not members of cooperative banks;

c) People's credit funds for the purpose of granting loans to clients who are not members of people's credit funds;

d) Microfinance institutions for the purpose of granting loans to individuals, family households that earn low income, and super-small enterprises;

dd) Other commercial banks, organizations permitted to trade securities by laws for the purpose of contributing capital and purchasing stocks of other enterprises and credit institutions;

e) Other commercial banks, foreign bank branches, organization permitted to trade securities by laws for the purpose of purchasing corporate bonds.

2. Commercial banks are entitled to accept the trusteeship from:

a) Other commercial banks, banks for social policies, foreign bank branches, financial companies, cooperative banks and organizations for the purpose of granting loans to clients;

b) Other commercial banks, organizations permitted to trade securities by laws for the purpose of contributing capital and purchasing stocks of other enterprises and credit institutions;

c) Other commercial banks, foreign bank branches, organization permitted to trade securities by laws for the purpose of purchasing corporate bonds.

Article 11. Offer and acceptance of trusteeship to/from foreign bank branches

1. Foreign bank branches shall be entitled to offer the trusteeship to:

a) Other commercial banks, foreign bank branches, financial companies for the purpose of granting loans to clients;

b) Cooperative banks for the purpose of granting loans to clients who are not members of cooperative banks;

c) People's credit funds for the purpose of granting loans to clients who are not members of people's credit funds;

d) Microfinance institutions for the purpose of granting loans to individuals, family households that earn low income, and super-small enterprises;

dd) Other commercial banks, foreign bank branches, organization permitted to trade securities by laws for the purpose of purchasing corporate bonds.

2. Foreign bank branches shall be entitled to accept the trusteeship from:

a) Parent banks, other branches of parent banks, commercial banks, banks for social policies, other foreign bank branches, cooperative banks and organizations for the purpose of granting loans to clients;

b) Parent banks, other branches of parent banks, commercial banks, foreign bank branches and organizations permitted to trade securities by laws for the purpose of purchasing corporate bonds.

Article 12. Offer and acceptance of the trusteeship to/from financial companies

1. Financial companies shall be entitled to offer the trusteeship to:

a) Other commercial banks, financial companies for the purpose of granting loans to clients;

b) Cooperative banks for the purpose of granting loans to clients who are not members of cooperative banks;

c) People's credit funds for the purpose of granting loans to clients who are not members of people's credit funds;

d) Microfinance institutions for the purpose of granting loans to individuals, family households that earn low income, and super-small enterprises;

dd) Other finance lease companies and financial companies for the purpose of performing financial and capital leasing transactions.

2. Financial companies shall be entitled to:

a) Receive entrusted investment in production and business projects developed by organizations and individuals;

b) Accept the trusteeship from other commercial banks, banks for social policies, foreign bank branches, financial companies, cooperative banks, organizations and individuals for the purpose of granting loans to clients;

c) Accept the trusteeship from other finance lease companies and financial companies for the purpose of performing financial and capital leasing transactions.

Article 13. Offer and acceptance of the trusteeship to/from finance lease companies

1. Finance lease companies shall be entitled to offer the trusteeship to other finance lease companies, financial companies for the purpose of performing financial and capital leasing transactions.

2. Finance lease companies shall be entitled to accept the trusteeship from other financial companies, finance lease companies for the purpose of performing financial and capital leasing transactions.

3. Finance lease companies shall be entitled to receive entrusted assets from organizations and individuals for the purpose of performing financial and capital leasing transactions.

Article 14. Offer and acceptance of the trusteeship to/from cooperative banks

1. Cooperative banks shall be entitled to entrust commercial banks, foreign bank branches and financial companies with the task of granting loans to clients who are not members of cooperative banks.

2. Cooperative banks shall be entitled to entrust people's credit funds with the task of granting loans to clients who are not members of people's credit funds.

3. Cooperative banks shall be entitled to accept the trusteeship from commercial banks, foreign bank branches and financial companies for the purpose of granting loans to clients who are not members of cooperative banks.

Article 15. Acceptance of the trusteeship from people's credit funds

1. People's credit funds shall be entitled to receive entrusted loans from organizations and individuals.

2. People's credit funds shall be entitled to accept the trusteeship from commercial banks, foreign bank branches, financial companies and cooperative banks for the purpose of granting loans to clients who are not members of people's credit funds.

Article 16. Offer and acceptance of the trusteeship to/from microfinance institutions

1. Microfinance institutions shall be entitled to entrust other microfinance institutions with the task of granting loans to individuals, family households that earn low incomes, and super-small enterprises.

2. Microfinance institutions shall be entitled to accept the trusteeship from other commercial banks, financial companies, foreign bank branches and microfinance institutions for the purpose of granting loans to individuals, family households that earn low incomes, and super-small enterprises.

Chapter III

ACCOUNTING, REPORTING AND TRANSITIONAL PROVISIONS

Article 17. Accounting provisions

1. Credit institutions and foreign bank branches being trustors must record all of the on-balance sheet accounts for transactions relating to trust assets in order to perform lending, capital leasing and investment in production and trading projects, capital contribution, corporate bond purchase towards trustees in accordance with the accounting law.

2. Credit institutions and foreign bank branches being trustors must record all of the off-balance sheet accounts for transactions relating to assets held in a trust in order to perform lending, capital leasing and investment in production and trading projects, capital contribution, corporate bond purchase towards trustees in accordance with the accounting law.

Article 18. Reporting provisions

1. Credit institutions and foreign bank branches must report their transactions pertaining to the offer and acceptance of the trusteeship in accordance with the State Bank’s regulations on statistical report principles applied to credit institutions and foreign bank branches.

2. Credit institutions and foreign bank branches shall be responsible for providing information about the operating outcome of trusteeship offer and acceptance for the National Credit Information Center of Vietnam in accordance with that State Bank’s regulations on credit information-related activities.

Article 19. Transitional provisions

In respect of the trust agreement concluded before the effective date of this Circular, credit institutions and foreign bank branches shall be allowed to adhere to their contractual terms and conditions as well as legal regulations, which takes effect at the time of concluding such agreement and ends on the date when the validity of such agreement expires, and shall not be allowed to renew this agreement. Adjustment or amendment to the aforementioned agreement shall be allowed only when such adjustment or amendment conforms to regulations laid down in this Circular and relevant laws.

Chapter IV

IMPLEMENTATION

Article 20. Responsibility of Banking Inspection and Supervision Department

1. Inspect, supervise trusteeship offer and acceptance carried out by credit institutions and foreign bank branches in accordance with regulations set forth in this Circular.

2. Impose penalties for administrative violations committed during activities of trusteeship offer and acceptance carried out by credit institutions and foreign bank branches in accordance with legal regulations on penalties for administrative violations in the domain of currency and banking operations.

3. Cooperate with the Services of Forecast, Statistics, Finance – Accounting, Foreign Exchange Management in the management of trusteeship offer and acceptance activities carried out by credit institutions and foreign bank branches.

Article 21. Responsibility of associated bodies

1. Responsibility of the Service of Foreign Exchange Management:

Monitor and manage loans and foreign debt repayments pertaining to trusteeship offer and acceptance carried out by credit institutions and foreign bank branches in accordance with legal regulations.

2. Responsibility of Branches of the State Bank of a centrally-affiliated city and province:

a) Inspect, supervise Branches of the State Bank of a centrally-affiliated city and province where the Department of Banking Inspection and Supervision is not present to inspect, supervise the trusteeship offer and acceptance carried out by credit institutions and foreign bank branches in that area within the scope of their functions and duties;

b) Report any violations and solutions to violation settlement to the Governor of the State Bank within the area of their authority.

3. Responsibility of the National Credit Information Center of Vietnam:

a) Receive and collect information about trusteeship offer and acceptance provided by credit institutions and foreign bank branches;

b) Provide information about trusteeship offer and acceptance carried out by credit institutions and foreign bank branches in accordance with the State Bank’s regulations on credit information-related activities.

Chapter V

IMPLEMENTARY PROVISIONS

Article 22. Effect

1. This Circular shall take effect from January 01, 2015.

2. The following documents and regulations shall become defunct:

- The State Bank’s Circular No. 04/2012/TT-NHNN dated March 8, 2012 on providing for trusteeship offer and acceptance carried out by credit institutions and branches of foreign banks;

- The Section II of the State Bank’s Circular No. 05/2006/TT-NHNN dated July 25, 2006 on providing guidance on finance leasing transactions and entrusted finance leasing services in accordance with regulations laid down in the Government’s Decree No. 16/2001/NĐ-CP dated May 02, 2001 and the Government’s Decree No. 65/2005/NĐ-CP dated May 19, 2005.

3. The Chief of Staff Office, the Chief Inspector of Banking Inspection and Supervision Department, Heads of affiliates of the State Bank, the Director of the State Bank branches of centrally-affiliated cities and provinces, Chairperson of the Board of Directors, Chairperson of the Board of Members, General Director (Director) of credit institutions, foreign bank branches shall be responsible for enforcing this Circular./.