On 11 February 2010, the State Bank of Vietnam (“SBV”) issued Circular 04/2010/TT-NHNN (“Circular 04”), setting out new legal stipulations on mergers, consolidations and acquisitions of merchant banks, financial companies, finance lease companies and credit cooperative organizations (collectively referred to as “credit organizations”) in Vietnam. Circular 04 became effective after 45 days from the issuing date and replaced Decision 241/1998/QD-NHNN5 issued by SBV on 15 July 1998.

Definitions

Merger means one or more credit organizations (merging credit organizations) merger with and into another credit organization (merged organization) by way of transfer of all lawful assets, rights, obligations and interests to the merged credit organization and, at the same time, termination of the existing of the merging credit organizations.

Consolidation means two or more credit organizations (credit organizations being consolidated) are consolidated into a new credit organization (consolidated credit organization) by way of transfer of all lawful assets, rights, obligations and interests to the consolidated credit organization and, at the same time, termination of the existing of the consolidating credit organizations.

Acquisition means a credit organization (acquiring credit organization) purchases all lawful assets, rights, obligations and interests of other credit organizations (credit organizations being acquired). After acquisition, credit organizations being acquired become subsidiaries of acquiring credit organization.

Principles

Circular 04 sets out several principles of mergers, consolidations and acquisitions that credit organizations must comply with, such as principles of Mutual Agreement, Protection of Customers, Protection of Confidential Information, Providing Information, Making Decisions.

Conditions

Circular 04 set our specific conditions applicable to each merger, consolidation and acquisition, which are generalized as follows:

• Must not violate relevant provisions set forth in the Law on Competition;
• Must have Proposal of Merger, Consolidation or Acquisition, which consist of full information as required in Circular 04 and must be consistent with Contract of Merger, Consolidation or Acquisition;
  
• Merged, consolidated or acquiring credit organization must have minimum charter capital which is equal to the legal capital prescribed by laws. Apart from satisfying requirement on minimum charter capital, acquiring credit organization must comply with statutory requirements on safety percentage of operation.
  

Forms of Mergers

The following forms of mergers are permitted:

• Banks, finance companies, credit cooperative organizations are merged with and into a bank;
  
• Finance companies are merged with and into a finance company;
  
• Finance lease companies are merged with and into a finance lease company.
  

Forms of Consolidations

The following forms of consolidations are permitted:

• Bank(s) is permitted to consolidate with other banks, finance companies, credit cooperative organizations to form a new bank;
  
• Finance companies are consolidated to form a new finance company;
  
• Finance lease companies are consolidated to form a new finance lease company.
  

Forms of Acquisition

The following forms of acquisitions are permitted:

• A bank is permitted to acquire finance company(ies), finance lease company(ies);
  
• A finance company is permitted to acquire finance lease company(ies).
  

It is unclear as to whether a bank, a finance company or a finance lease company is permitted to acquire other banks, as this form is not specifically mentioned in Circular 04. Process and Approval All cases of mergers, consolidations and acquisitions must be approved by the Governor of SBV. Process and documents required with particular guidance as to how the documents shall be prepared for obtaining approval of the Governor of SBV are specifically described in Circular 04.