New guidelines on indirect offshore investment

The State Bank of Viet Nam on June 29 issued Circular 10/2016/TT-NHNN guiding some contents of Decree 135/2015/ND-CP, dated December 31, 2015 of the Government regulating indirect offshore investment (Circular 10).

Safety ratios of investment

Under Circular 10, the safety ratio of investment of the self-trading organizations as commercial banks and general financial companies must be 7% of the self-available capital of commercial banks or general financial companies and exclude the activities of investment and business by the offshore branches of such organizations.

Commercial banks and general financial companies with offshore investment activities must ensure this safety ratio of investment and comply with the current laws on the limits and safety ratios for the activities of commercial banks and general financial companies.

Handling cases of exceeding the safety ratio of investment

In cases where a commercial bank or a general financial company reduces its self-available capital, causing the prescribed safety ratio of investment to be exceeded, such commercial bank or general financial company must:

· Immediately report the SBV on the status of exceeding the safety ratio of investment due to a reduction in self-available capital;

· Within the maximum time limit of three months of the first month of the exceeded safety ratio of investment, adopt necessary measures to increase its self-available capital; handle offshore investments and remit abroad invested moneys back to Viet Nam to ensure the safety ratio of investment; and

· Stop remitting abroad the investment capital in line with the registered limits of the year approved by the State Bank.

Investment of program on bonus shares issued abroad

A bonus share program means the one held by a foreign organization to offer shares to employees working for foreign organizations in Viet Nam and a form of indirect offshore investment by individual investors as prescribed by Decree 135/2015/ND-CP.

Where the organization holding the program of bonus shares suspends to operate in Viet Nam, prior to its termination, such organization must sell bonus shares and bonus share purchase rights and transfer all the proceeds to the employees who hold Vietnamese nationality and took part in the scheme.

Circular 10/2016/TT-NHNN shall come into effect from August 13, 2016.

(Source VGP)