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Banking & Finance

Circular to address high ownership of financial institutions

Released at: 13:45, 06/06/2015

Circular to address high ownership of financial institutions

SBV directs financial institutions to address instances of individuals and organizations holding share ratios that exceed stated limits.

by Hung Nguyen

The State Bank of Vietnam (SBV) has issued Circular No. 06/2015 / TT-NHNN on handling ownership in financial institutions that exceeds the limits stated in regulations for the Law on Financial Intuitions. Institutions must coordinate with shareholders with too many shares and address the problem prior to December 31.

If this deadline passes with no action is taken the SBV will step in, with those not acting in accordance with its direction being removed from their positions and no dividends being paid on the number of shares that exceed the limit. Financial institutions must also not provide credit to shareholders who have shares exceeding the limit.

Circular No. 06 is the next step in implementing measures to handle situations where shareholders hold excessive numbers of shares, which can lead to manipulation and other risks.

The SBV earlier issued Circular No. 36 with specific provisions on limitations, stating that an individual cannot hold more than 30 per cent of a financial institution’s charter capital, organizations cannot own more than 15 per cent, and groups of organizations and related parties cannot own more than 20 per cent.

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