1. Interpretation of terms: In this Circular, the following terms are construed as follows:

1.1. Lessees mean organizations that operate in Vietnam or individuals who live and work in Vietnam and directly use leased assets for their operation purposes, including:

a/ Individuals, family households;

b/ Enterprises;

c/ Other organizations entitled to borrow capital from credit institutions.

1.2. Foreign credit institutions mean foreign banks, financial companies, financial leasing companies or international financial institutions which are established under foreign or international law, contribute capital to joint-venture financial leasing companies or financial leasing companies with 100% foreign capital in Vietnam.

1.3. Legal capital means the minimum level of charter capital required under the Government's regulations for the establishment of a financial leasing company.

1.4. Charter capital means the capital allocated by the State, credit institutions having affiliate financial leasing companies or foreign credit institutions, or contributed or acquired from share purchase by organizations and/or individuals, which is stated in the charters of financial leasing companies.

1.5. Founding members mean organizations and individuals involved in the approval of the first charter of a financial leasing company.

2. Types of financial leasing company:

2.1. State-run financial leasing companies mean financial leasing companies invested, established and having their production and business activities organized and managed by the State. The grant of establishment and operation licenses to State-run financial leasing companies shall comply with separate guidance of the State Bank.

2.2. Joint-stock financial leasing companies mean financial leasing companies established in the form of joint-stock companies to which organizations and individuals jointly contribute capital in accordance with the State Bank's regulations and other provisions of law.

2.3. Affiliate financial leasing companies of credit institutions (hereafter called affiliate financial leasing companies for short) mean financial leasing companies with the legal person status and applying the independent cost-accounting regime, each established by a credit institution (its owner) with its own capital.

2.4. Joint-venture financial leasing companies mean financial leasing companies established with capital contributed jointly by a Vietnamese party consisting of one or more credit institutions and/or Vietnamese enterprises and a foreign party consisting of one or more foreign credit institutions on the basis of joint-venture contracts. The Vietnamese party must comprise at least one Vietnamese credit institution being member of the joint-venture financial leasing company.

2.5. Financial leasing companies with 100% foreign capital mean financial leasing companies established with capital contributed by one or more foreign credit institutions under the provisions of Vietnamese law.

3. The term of operation of a financial leasing company in Vietnam shall be 50 (fifty) years at most. In case of a need for extension of this term, the State Bank's approval is required. Each extension must not exceed 50 (fifty) years.

For financial leasing companies already established and licensed before the effective date of the Government's Decree No. 16/2001/ND-CP of May 2, 2001, their operation terms shall comply with their operation licenses.

4. Forms of contribution of charter capital:

Charter capital of financial leasing companies shall be contributed in the following forms:

4.1. Money:

a/ For State-run financial leasing companies, affiliate financial leasing companies of credit institutions and joint-stock financial leasing companies, the charter capital shall be contributed in Vietnam dong.

b/ For joint-venture financial leasing companies and financial leasing companies with 100% foreign capital: Foreign parties to the companies may contribute charter capital either in foreign currencies or Vietnam dong, which must originate from their lawful investments in Vietnam. Vietnamese parties to joint-venture financial leasing companies may contribute capital in Vietnam dong or foreign currencies. In cases where the parties contribute capital in Vietnam dong or foreign currencies other than US dollar, the contributed money amount must be converted into US dollar at the average exchange rate on the inter-bank foreign exchange market as announced by the State Bank at the time of contributing capital.

4.2. Other assets: Such assets must be under the lawful ownership or land use rights of the capital-contributing parties and be necessary for the operations of financial leasing companies (excluding assets for lease). The valuation and transfer of the ownership over assets or land use rights and proportions of capital contribution with assets shall comply with current provisions of Vietnamese law.

5. Charter capital contribution proportions, transfer of contributed capital portions, distribution of profits and sharing of risks of joint-venture financial leasing companies and financial leasing companies with 100% foreign capital:

5.1. Charter capital contribution proportions: The charter capital contribution proportions of the foreign party and the Vietnamese party to a financial leasing company shall be agreed upon by the involved parties and approved by the State Bank of Vietnam. The foreign party's contributed capital portion must not be lower than 30% of the charter capital of the company.

5.2. Transfer of contributed capital portions

a/ The Vietnamese and foreign parties to a financial leasing company may transfer their contributed capital portions but must ensure the charter capital contribution proportions specified at Point 5.1 of this Circular and prioritize the transfer to joint-venture parties. In case of transfer to other organizations, the transfer conditions must not be more favorable than those for cases of transfer to other joint-venture parties. The transfer of capital must be agreed upon by the parties to the joint-venture financial leasing company.

b/ Financial leasing companies with 100% foreign capital shall have the right to transfer their capital after getting approval of the State Bank.

c/ In cases where the transfer of capital of joint-venture financial leasing companies or financial leasing companies with 100% foreign capital results in the change of types of such companies, they must make adjustments suitable with the prescribed types of company.

d/ In cases where the transfer of capital of financial leasing companies generates profits, the transferor must pay taxes thereon in accordance with the provisions of Vietnamese law.

5.3. Distribution of profits and sharing of risks: Parties to a joint-venture financial leasing company shall distribute profits and share risks within the company according to the capital contribution proportion of each party, unless otherwise agreed upon by the parties in the joint-venture contract in accordance with the provisions of Vietnamese law.

6. Conditions for financial leasing companies to be granted establishment and operation licenses (hereafter called licenses for short):

6.1. General conditions:

a/ Wishing to conduct financial leasing activities in the area applied for operation;

b/ Having enough legal capital under current provisions of law;

c/ Founding members are organizations or individuals having prestige and financial capability;

d/ Managers and executive officers have full civil act capacity and professional qualifications suitable with the operations of financial leasing companies and compatible with the regulations of the State Bank;

e/ Having a draft charter on organization and operation conformable with the Credit Institution Law, the Government's decrees on organization and operation of financial leasing companies and other provisions of law;

f/ Having feasible business plans;

g/ Credit institutions being their owners have been operating for at least 03 (three) years.

6.2. For joint-venture financial leasing companies and financial leasing companies with 100% foreign capital, apart from the conditions specified at Point 6.1, the foreign parties must also meet the following conditions:

a/ Being permitted by competent foreign authorities to engage in banking or financial leasing activities;

b/ Being permitted by competent foreign authorities to operate in Vietnam.

7. Dossiers of application for licenses:

7.1. Applications for licenses:

a/ For affiliate financial leasing companies of credit institutions: The applications for licenses must be signed by the chairmen of the Managing Boards of the credit institutions being owners or their authorized persons.

b/ For joint-stock financial leasing companies: The applications for licenses must be signed by the chairmen of the Managing Boards of the credit institutions being owners or Managing Board members authorized by the chairmen.

c/ For joint-venture financial leasing companies and financial leasing companies with 100% foreign capital: The applications for licenses must be signed by at-law representatives or authorized persons of capital-contributing parties.

7.2. Draft charter: The charter of a financial leasing company must have the following principal contents:

a/ The name and location of its headquarters;

b/ The operation contents and scope;

c/ The operation duration;

d/ The charter capital and mode of capital contribution;

e/ Tasks and powers of the Managing Board, the general director (director) and the Control Board;

f/ Formalities for election, appointment and dismissal of members of the Managing Board, the general director (director) and the Control Board;

g/ The representative of the legal person of the company;

h/ Rights and obligations of shareholders (for joint-stock financial leasing companies);

i/ The financial, accounting, inspection, control and internal audit principles;

j/ Cases of dissolution and dissolution procedures;

k/ Procedures for charter amendment.

7.3. The operation plan for the first 03 (three) years, which clearly states the operation contents, mode and area, economic efficiency and benefits;

7.4. The list, curricula vitae and diplomas evidencing the capability and professional qualifications of founding members, members of the Managing Board, the Control Board and the general director (director) of the financial leasing company (for Vietnamese individuals, their curricula vitae shall be made according to a set form; for foreign individuals, their curricula vitae shall be made according to regulations of their home countries or the country where they are citizens);

7.5. The plan on charter capital contribution, list of capital-contributing parties, and their commitments on the levels of capital to be contributed;

7.6. The financial situation and information on major shareholders (for a joint-stock financial leasing company);

7.7. The approval of the provincial/municipal People's Committee regarding the location of the headquarters of the financial leasing company.

8. For affiliate financial leasing companies of credit institutions, in addition to papers specified in Clause 7, Section II of this Circular, dossiers of application for licenses must each comprise also the following:

8.1. The document signed by the chairman of the Managing Board of the credit institution being owner or his/her authorized person, on capital sources and the level of charter capital allocated to the financial leasing company.

8.2. Dossiers related to the credit institution being owner, including:

a/ The establishment decision or establishment and operation license, the business registration certificate granted upon the establishment of the institution, and amendments and/or supplements thereto;

b/ The current charter;

c/ The audited financial balance sheet and profit and loss statement, and the report on the operation of the institution for the latest 03 (three) years.

9. For joint-venture financial leasing companies, financial leasing companies with 100% foreign capital, apart from the dossiers specified in Clause 7, Section II of this Circular, the dossiers of application for licenses must each comprise also the following:

9.1. Charters of the capital-contributing parties;

9.2. Business permits of the capital-contributing parties;

9.3. The document of a competent foreign authority permitting the foreign party to operate in Vietnam in the form of a joint-venture financial leasing company or financial leasing company with 100% foreign capital. In cases where the foreign law does not require such a document, a written certification of the competent authority is required;

9.4. The audited financial balance sheets and profit and loss statement, and the reports on the operation of the capital-contributing parties for the latest 03 (three) years;

9.5. The draft joint-venture contract, for a joint-venture financial leasing company. Such a draft must contain the following principal contents:

a/ The name and address of the joint-venture financial leasing company;

b/ The names, addresses and representatives of the joint-venture parties;

c/ The joint-venture operation duration;

d/ The charter capital: The capital contribution proportions and level of capital contributed by each party. The capital contribution plan, clearly stating the amount of capital in foreign currencies, Vietnam dong, or other assets (if any);

e/ The rights and obligations of each party;

f/ The number and percentages of members of the Managing Board, the Control Board and the directorate for the joint-venture parties;

g/ The principles on cost-accounting, bookkeeping, reporting, setting up and use of funds; the distribution of profits and sharing of losses among joint-venture parties;

h/ The procedures for settlement of disputes between parties, which arise from the implementation of the joint-venture contract, procedures for liquidation, dissolution, consolidation of the joint-venture financial leasing company;

i/ The conditions for amendment or supplementation of the joint-venture contract.

10. Order and procedures for submission of dossiers of application for licenses:

10.1. For joint-stock financial leasing companies: Such a dossier shall be made in 03 (three) sets to be sent to the State Bank's branch in the province or city where the company is headquartered.

10.2. For affiliate financial leasing companies of credit institutions: Such a dossier shall be made in 02 (two) sets to be sent to the State Bank.

10.3. For joint-venture financial leasing companies and financial leasing companies with 100% foreign capital: Such a dossier shall be made in 02 (two) sets (one in Vietnamese and the other in English or French) to be sent to the State Bank.

10.4. The documents in dossiers mentioned at Points 10.1 and 10.2 above must be the originals; if they are copies, they must be notarized or certified by agencies which have issued their originals.

10.5. For dossiers mentioned at Point 10.3 above: The foreign language dossier set must be the original or duplicate certified by a competent authority. The Vietnamese language copies and foreign language translations must be notarized by the Vietnamese public notary or overseas diplomatic missions or consulates. Foreign language translations from Vietnamese must be notarized by the Vietnamese public notary or organizations issuing such documents. The following documents must be consularized:

a/ The operation charter of the foreign organization;

b/ The license granted by a competent foreign agency permitting the foreign credit institution to carry out banking or financial leasing activities;

c/ The document issued by a competent foreign agency permitting the foreign party to operate in Vietnam in the form of a joint-venture financial leasing company or a financial leasing company with 100% foreign capital.

10.6. Time limit for consideration of the grant of licenses:

a/ For joint-stock financial leasing companies:

- Within 30 (thirty) days after receiving complete dossiers of application for licenses, the State Bank's provincial/municipal branches shall consider and evaluate such dossiers and send an official letter together with 2 (two) dossier sets to the State Bank Governor for consideration and decision.

- Within 60 (sixty) days after receiving complete dossiers of application for licenses, submitted by the State Bank's provincial/municipal branches, the State Bank Governor shall consider to grant or refuse to grant licenses. In case of refusal to grant licenses, the State Bank shall give written replies, clearly stating the reasons therefor.

b/ For other financial leasing companies:

Within 90 (ninety) days after receiving complete dossiers of application for licenses, the State Bank shall consider to grant or refuse to grant licenses. In case of refusal to grant licenses, it shall give written replies, clearly stating the reasons therefor.

10.7. Licenses granted by the State Bank include:

a/ Licenses of affiliate financial leasing companies of credit institutions and joint-stock financial leasing companies.

b/ Licenses of joint-venture financial leasing companies or financial leasing companies with 100% foreign capital.

11. Licensing fee:

11.1. The licensing fee payable for a new license (or license extension) of a financial leasing company shall comply with the provisions of the fee and charge law.

11.2. The fee amount mentioned at Point 11.1 above must neither be deducted from the charter capital of a financial leasing company nor refunded in any case.

11.3. Within 15 (fifteen) days after being granted licenses, the licensed financial leasing companies must pay licensing fee at the State Bank's Transaction Office; for joint-stock financial leasing companies, the fee must be paid at the State Bank's branches in the provinces or centrally-run cities where they are headquartered.

12. Operation inauguration:

12.1. To inaugurate its operation, a licensed financial leasing company must fully meet the following conditions:

a/ Having its charter approved by the State Bank;

b/ Having a business registration certificate;

c/ Having the full charter capital as registered:

- Charter capital contributed in money must be wholly transferred into an interest-free blockaded account at the State Bank's Transaction Office or branch in the province or centrally-run city where the company is headquartered (for joint-stock financial leasing companies) and certified in writing by the State Bank's branch keeping such account. After inaugurating its operation, the financial leasing company may have its money amount released from the blockaded account at the State Bank.

- For charter capital portions contributed in the form of other assets, there must be legal dossiers certifying the transfer of the ownership over such assets to the financial leasing company in accordance with the provisions of Vietnamese law.

d/ Completing the legal dossier on the financial leasing company's right to own or to use its head-office in Vietnam;

e/ At least 30 (thirty) days before inaugurating its operation, the financial leasing company must send to the State Bank (the Department for Banks and Non-Bank Credit Institutions) the originals or notarized copies of the following documents:

- The document certifying the remittance of the charter capital in cash into the blockaded account;

- The receipt of the paid licensing fee;

- The business registration certificate;

- The legal dossier on the company's ownership or use right over its head-office;

f/ Announcing in Vietnamese on the central and local dailies (in the locality where the company is headquartered) for 5 consecutive issues the following main contents:

- The full name and abbreviation of the financial leasing company;

- The address of its head-office, telephone number and fax number, etc.

- The charter capital;

- The operation contents, scope, area and duration;

- The serial number and date of issue of the license by the State Bank; the serial number and date of issue of the business registration certificate and the name of the issuing agency;

- The full names and nationalities of the chairman and members of the Managing Board, the Control Board, the executive general director (director);

- The expected date of inauguration of its operation;

- Other contents, if necessary.

12.2. Twelve months after being licensed, if the financial leasing company fails to inaugurate its operation, the granted license shall automatically be invalid. The State Bank shall withdraw such license and carry out procedures to refund the capital in the blockaded account (if any), after deducting the prescribed procedural fees.

13. Withdrawal of licenses:

13.1. The licensed financial leasing companies may have their licenses withdrawn according to the provisions of Clause 1, Article 29 of the Credit Institution Law.

13.2. Procedures and dossiers for the withdrawal of licenses of financial leasing companies shall comply with the provisions of law and guidance of the State Bank.

13.3. After having their licenses withdrawn, financial leasing companies must immediately terminate all operations stated in their licenses.

13.4. The State Bank shall announce in Vietnamese decisions to withdraw the licenses of financial leasing companies on local dailies in the localities where the companies are headquartered and on the central dailies for three consecutive issues.

14. Changes subject to approval:

14.1. A financial leasing company must get written approval of the State Bank before making one of the following changes:

a/ Its name;

b/ Its charter capital level;

c/ The location of its head-office, branch or representative office;

d/ Its operation contents, scope and/or duration;

e/ The transfer of contributed capital portions of the parties to the company;

f/ The total money amount from the transfer of registered shares, since the first-time transfer, which exceeds 20% of the charter capital of the company;

g/ The proportions of shares of major shareholders in the joint-stock financial leasing company;

h/ The membership of the Managing Board, the general director (director) and the Control Board.

14.2. Dossiers of request for the State Bank approval of changes:

14.2.1. The dossier for renaming of the financial leasing company, comprising:

a/ The exposition of the chairman of the Managing Board of the financial leasing company, requesting the renaming of the company. Such exposition must clearly state the reasons and necessity for the renaming;

b/ The excerpts of the minutes and resolution of the company's Managing Board on the renaming of the company;

c/ The written approval of the credit institution having an affiliate financial leasing company; of the parties contributing capital to the joint-venture financial leasing company; or of the foreign parties to the financial leasing company with 100% foreign capital regarding the renaming of the company;

d/ The excerpts of the minutes and resolution of the shareholders congress on the renaming of the joint-stock financial leasing company.

14.2.2. The dossier for changing the level of charter capital, comprising:

a/ The exposition of the chairman of the Managing Board of the financial leasing company, requesting to change the level of charter capital, clearly stating the necessity and reasons therefor and measures to handle problems (if any) before making such change;

b/ The excerpts of the minutes and resolution of the Managing Board of the financial leasing company regarding the change of the level of charter capital of the company;

c/ The written approval of the credit institution having an affiliate financial leasing company; of the parties contributing capital to the joint-venture financial leasing company; or of the foreign parties to the financial leasing company with 100% foreign capital regarding the change of the level of charter capital of the company;

d/ The report on the organization and operation of the financial leasing company by the end of the latest quarter;

e/ Apart from the above-said dossiers, a joint-stock financial leasing company must also send to the State Bank the following documents:

- Excerpts of the minutes and resolution of the shareholders congress on the change of the level of charter capital;

- The plan to change the level of charter capital, which has been adopted by the shareholders congress;

- The list of shareholders and their respective capital contribution proportions before and after the company changes its charter capital level;

- Applications of major shareholders for purchase or sale of shares.

14.2.3. The dossier for relocation of the financial leasing company's head-office, branch or representative office, comprising:

a/ The exposition of the chairman of the company's Managing Board, requesting the State Bank to approve the relocation of its head-office, branch or representative office, clearly stating the reasons therefor and safety conditions of the company's vaults at the new location;

b/ The excerpt of the resolution of the company's Managing Board regarding the relocation of its head-office, branch or representative office;

c/ The document of the provincial/municipal People's Committee at the new location, permitting the company to locate its head-office, branch or representative office;

d/ The written certification of the company's lawful ownership or use right over the location of its head-office, branch or representative office;

e/ Opinions of the director of the State Bank's provincial/municipal branch in the locality where the company locates its new head-office, branch or representative office.

14.2.4. The dossier for change of the financial leasing company's operation contents, scope and/or duration, comprising:

a/ The exposition of the chairman of the Managing Board of the company, requesting the change of the company's operation contents, scope and/or duration, clearly stating the reasons and necessity therefor;

b/ Excerpts of the minutes and resolution of the company's Managing Board regarding changes in its operation contents, scope and/or duration;

c/ The written approval of the credit institution being the owner having an affiliate financial being company; of the parties contributing capital to the joint-venture financial leasing company; or of foreign parties to the financial leasing company with 100% of foreign capital regarding changes in its operation contents, scope and/or duration;

d/ The report on organization and operation of the company by the end of the latest quarter.

e/ Excerpts of the minutes and resolution of the shareholders congress, for a joint-stock financial leasing company.

14.2.5. The dossier for the transfer of capital portions of a party to a joint-venture financial leasing company, comprising:

a/ The exposition of the chairman of the company's Managing Board, requesting the State Bank to approve the transfer, clearly stating the reasons therefor;

b/ The excerpt of the minutes of the meeting the company's Managing Board regarding the transfer of capital;

c/ The written request of the transferor to the State Bank for the transfer of a part or whole of his/her/its capital portion in the company, enclosed with the draft of the transfer contract;

d/ The written certification by the transferee, accepting the transfer of capital and requesting the State Bank to permit the purchase of a part or whole of the transferor's capital portion in the company;

e/ In cases where the transferee is not one of the parties to the joint-venture, it must also have the documents specified in Clause 9, Section II of this Circular.

14.2.6. The dossier for the transfer of registered shares in excess of 20%, or resulting in the change of proportions of shares of major shareholders in a joint-stock financial leasing company, comprising:

a/ The exposition of the chairman of the Managing Board, requesting the transfer of registered shares which exceeds 20% or results in the change of proportions of shares of major shareholders;

b/ The shareholders' applications for the transfer of shares (for shareholders being legal entities, such applications must be signed and sealed by their lawful representatives);

c/ The shareholders' written requests for the purchase of shares (for shareholders being legal entities, such written requests must be signed and stamped by their lawful representatives), expressing their commitment on the legitimacy of capital sources used for the purchase of shares, acceptance of the financial situation and the charter of the joint-stock financial leasing company, and observance of all current provisions of law on capital contribution and share purchase;

d/ The dossiers of shareholders transferring registered shares below 20% of the charter capital;

e/ Other documents related to the change or transfer of shares.

14.2.7. The dossier, order and procedures for change of member(s) of the Managing Board, the Control Board or the general director (director) shall comply with the State Bank Governor's regulations on organization and operation of the Managing Boards, Control Boards, and general directors (directors) of non-bank credit institutions.

14.3. Order and procedures for approval of changes in financial leasing companies:

14.3.1. For joint-stock financial leasing companies:

a/ For changes at Points 14.2.2, 14.2.3 and 14.2.6 of this Circular, each dossier must be made in 02 (two) sets and sent to the State Bank's provincial/municipal branch in the locality where the company is headquartered. Within 15 (fifteen) working days after receiving the complete dossier, the director of the State Bank's provincial/municipal branch shall consider to approve the said changes of the financial leasing company. In case of disapproval, the State Bank's provincial/municipal branch in the locality where the company is headquartered shall give a written reply, clearly stating the reasons therefor.

After approving or disapproving the above-said changes, the director of the State Bank's provincial/municipal branch in the locality where the joint-stock financial leasing company is headquartered shall submit a report thereon to the State Bank Governor.

b/ For changes mentioned at Points 14.2.1 and 14.2.4 of this Circular, each dossier shall be made in 03 (three) sets and sent to the State Bank's provincial/municipal branch in the locality where the company is headquartered. Within 15 (fifteen) working days after receiving the complete dossier, the State Bank's provincial/municipal branch shall have to submit its written opinions to the State Bank (the Department for Banks and Non-Bank Credit Institutions), enclosed with 02 (two) dossier sets of the company.

14.3.2. For other financial leasing companies:

Each dossier shall be made in 02 (two) sets and sent to the State Bank (the Department for Banks and Non-Bank Credit Institutions).

14.3.3. Within 15 (fifteen) working days after receiving the complete dossier under regulations, the State Bank Governor shall consider to approve changes in the company. In case of disapproval, the State Bank shall give a written reply, clearly stating the reasons therefor.

14.3.4. After getting the State Bank's approval, financial leasing companies must register with a competent state agency the changes mentioned at Points 14.2.1, 14.2.2, 14.2.3 and 14.2.4 and must announce such changes on the central and local dailies in accordance with the provisions of law.

14.3.5. Financial leasing companies must send written registrations of their changes (notarized copies) issued by competent state agencies and other related documents to the State Bank (the Department for Banks and Non-Bank Credit Institutions). For joint-stock financial leasing companies, each must send an additional set of the above-mentioned documents to the State Bank's provincial/municipal branch in the locality where it is headquartered.

15. Changes subject to notification: Within 30 (thirty) days after making the following changes, affiliate financial leasing companies of credit institutions, joint-venture financial leasing companies or financial leasing companies with 100% foreign capital must send written notices to the State Bank:

15.1. Change of the chairman of the Managing Board or executive general director (director) of a capital-contributing party;

15.2. Change of the name and/or address of a capital-contributing party;

15.3. Division, split, merger, consolidation, dissolution or bankruptcy of a capital-contributing party.

16. Organizational structure of a financial leasing company

16.1. Branches and representative offices:

a/ A financial leasing company may open, or terminate the operation of, its branches or representative offices at home or in foreign countries where it wish to operate, after getting written approval of the State Bank.

b/ The conditions, dossiers and procedures for opening and termination of the operation of branches or representative offices of a financial leasing company shall comply with the State Bank's regulations on opening and termination of the operation of branches and representative offices of non-bank credit institutions, and with current provisions of law.

16.2. Affiliate companies

a/ A financial leasing company may establish affiliate companies with the legal person status, which shall conduct independent cost-accounting with its own capital for operation in financial, banking and insurance domains, in asset management, exploitation and sale in the course of handling loan-security assets and assets assigned by the State to financial leasing companies for the retrieval of debts.

b/ The establishment of affiliate companies of a financial leasing company shall comply with the State Bank's guidance.

16.3. The assisting apparatus at the head-office and branches of a financial leasing company shall each include the office, professional departments (divisions) and transaction bureaus.

17. Division, split, merger, consolidation, acquisition and dissolution: The division, split, merger, consolidation, acquisition and dissolution of a financial leasing company must be approved in writing by the State Bank and comply with its guidance.

18. Management, administration and control:

18.1. Each financial leasing company must have a Managing Board, a Control Board and a general director (director).

For an affiliate financial leasing company of a credit institution which has not yet had a separate Managing Board or Control Board, within 90 (ninety) days after this Circular takes effect, the Managing Board of the credit institution being the owner must appoint members of the Managing Board and the Control Board of the financial leasing company strictly according to regulations for submission to the State Bank Governor for approval.

18.2. The election, appointment or dismissal of the chairman and members of the Managing Board, the head and members of the Control Board and the general director (director) of a financial leasing company shall comply with the State Bank Governor's regulations on organization and operation of the Managing Boards, Control Boards and general directors (directors) of non-bank credit institutions, and with current provisions of law.

18.3. The chairman and members of the Managing Board, the head and members of the Control Board, the general director (director) of a financial leasing company must be approved by the State Bank Governor before performing their tasks.

18.4. The specific functions, tasks and powers of members of the Managing Board, the Control Board, the general director (director) of a financial leasing company shall comply with the State Bank Governor's regulations on organization and operation of the Managing Boards, Control Boards and general directors (directors) of non-bank credit institutions, and with current provisions of law.

19. Contents and scope of operation:

19.1. Financial leasing companies are allowed to mobilize capital from the following sources:

a/ Time deposits of one-year or longer term, of organizations and individuals.

b/ Short-, medium- and long-term loans of domestic and foreign credit institutions.

c/ Issuance of valuable papers:

- Financial leasing companies may issue valuable papers of different kinds (promissory notes, bills, deposit certificates, bonds, etc.) of one-year or longer term to mobilize capital from domestic organizations and individuals in strict compliance with the State Bank Governor's regulations on issuance of valuable papers by credit institutions for mobilization of domestic capital.

- Financial leasing companies may issue bonds, deposit certificates and other valuable papers of one-year or longer term to mobilize capital from foreign organizations and individuals when it is so approved by the State Bank.

d/ Reception of other capital sources under regulations of the State Bank.

19.2. Financial leasing companies may carry out the following professional operations in accordance with regulations of the State Bank:

a/ Providing financial leasing;

b/ Advising customers on matters related to professional financial leasing operations;

c/ Providing consignment services: Financial leasing companies shall lease assets to customers designated by the consignor and enjoy consignment charges. All risks arising in the course of consigned leasing shall be borne by the consignor. Financial leasing companies may provide the following consignment services:

- Accepting consignment of machinery and equipment for financial lease to customers.

- Accepting consignment of money from domestic and foreign organizations and individuals for the import of machinery and equipment for financial lease to customers.

- Other consignment services related to financial leasing activities.

d/ Providing asset-management services related to financial lease, concretely:

- Services on management of financially- leased assets of other financial leasing companies.

- Other asset-management services related to financial leasing activities.

e/ Providing guarantee services related to financial lease under the State Bank's guidance;

f/ Providing operating lease;

g/ Making purchase and sublease in the form of financial lease;

h/ Selling collectibles from financial leasing contracts to organizations or individuals.

19.3. Financial leasing companies are entitled to carry out other professional operations when so permitted by the State Bank.

19.4. Foreign exchange activities:

Financial leasing companies are entitled to carry out foreign exchange activities according to licenses granted by the State Bank.

20. Currency used in financial leasing transactions:

20.1. Financial leasing companies shall carry out financial leasing transactions in Vietnam dong.

20.2. For financial leasing transactions effected in foreign currencies, financial leasing companies must abide by the State Bank's guidance and current provisions of law on management of foreign exchange.

21. Interest rates and reduction of financial leasing interests:

21.1. Financial leasing companies shall fix financial leasing interest rates, based on the credit capital supply and demand, the domestic and international market interest rates and related costs.

21.2. Reduction of financial leasing interests: Financial leasing companies may reduce or exempt financial leasing interests according to regulations of the State Bank.

22. The restructuring of debts and transfer of overdue debts for financial leasing activities shall comply with regulations of the State Bank.

23. Safety rates: Financial leasing companies must maintain the safety ratios defined in Article 81 of the Credit Institution Law in accordance with the State Bank Governor's regulations on safety ratios in the operation of credit institutions.

24. Cases where financial leasing companies are not allowed to provide financial leasing:

24.1. A financial leasing company is not allowed to provide financial leasing to the following subjects:

a/ Members of its Managing Board or Control Board, its general director (director), deputy general directors (deputy directors);

b/ Appraisers and approvers of leasing;

c/ Fathers, mothers, wives, husbands or children of members of its Managing Board or Control Board, its general director (director), deputy general directors (deputy directors).

24.2. A financial leasing company must not accept guarantee provided by subjects defined at Point 24.1 of this Section as a basis for providing financial leasing to its customers.

25. Restriction of leasing:

25.1. A financial leasing company must not provide financial leasing with preferential conditions to the following subjects:

a/ The audit organization or auditors currently auditing the company; its chief accountant or inspectors;

b/ Its major shareholders;

c/ An enterprise having one of the subjects defined at Point 24.1 of this Section who owns more than 10% of the charter capital of such enterprise.

25.2. The total debt balance of the lease to the subjects defined at Point 25.1 of this Section must not exceed 5% of a financial leasing company's own capital.

26. Financial leasing companies may open accounts at the State Bank and commercial banks licensed to operate in Vietnam. In case of a need to open foreign currency accounts overseas, they must obtain permission of the State Bank.

27. Financial leasing contracts:

27.1. A financial leasing contract shall be made in writing according to the provisions of law and Government decrees on organization and operation of financial leasing companies.

27.2. A financial leasing contract shall take effect as from the date agreed upon by the concerned parties in the contract.

27.3. Cases of termination of a financial leasing contract ahead of schedule:

27.3.1. The lessor shall have the right to terminate the financial leasing contract ahead of schedule in one of the following cases:

a/ The lessee fails to pay the rent under the contract;

b/ The lessee breaches terms of the contract;

c/ The lessee goes bankrupt or dissolves;

d/ The lessee's guarantor goes bankrupt or dissolves and the lessor rejects his/her/its proposal to stop the guarantee or substitute the guarantor.

27.3.2. The lessee may terminate the financial leasing contract in one of the following cases:

a/ The lessor fails to hand over leased assets at his/her its own faults;

b/ The lessor breaches terms of the contract;

27.3.3. A financial leasing contract shall terminate ahead of schedule in cases where the leased assets are lost or irreparably damaged.

27.3.4. A financial leasing contract shall terminate ahead of schedule in cases where the lessor agrees to let the lessee pay all the rent ahead of the deadline stated in the contract.

27.4. Handling of financial leasing contracts which terminate ahead of schedule:

27.4.1. In cases where a financial leasing contract terminates ahead of schedule in one of the cases specified at Point 27.3.1 above, the lessee must immediately pay the whole remaining rent amounts. If the lessee fails to pay the rent before the deadline set by the financial leasing company, the financial leasing company shall handle leased assets as follows:

a/ It shall have the right to immediately recover the leased assets without having to wait for a court decision and request the lessee to immediately pay the whole remaining rent amount not yet paid under the contract. All acts of obstructing, appropriating, using or not returning leased assets to the lessor are strictly prohibited;

b/ After recovering leased assets, within 60 (sixty) days, the lessor must completely handle such assets. The proceeds therefrom shall be used to pay the outstanding rent to the lessor and the expenses arising in the process of recovering the leased assets. If such proceeds are not enough to make payment, the lessee shall have to pay the deficit to the lessor;

c/ In cases where the lessee has paid part of the payable rent amount and the financial leasing company has completely handled the leased assets, if the proceeds exceed the rent amount payable under the contract and the expenses arising in the recovery of leased assets, the financial leasing company shall have to refund the lessee the excessive money amount.

d/ During the time the lessor handles the leased assets, if the lessee repays the whole rent amount payable under the contract as well as asset-handling expenses, the lessor shall transfer the ownership over the leased assets to the lessee as in the case of completion of the contract;

e/ Within 30 (thirty) days after the lessee receives the lessor's request for the recovery of leased assets, he/she/it must return such assets to the lessor.

27.4.2. In cases where a financial leasing contract terminates ahead of schedule according to Point 27.3.2 above, the lessor must pay compensation to the lessee.

27.4.3. In cases where a financial leasing contract terminates ahead of schedule according to the provisions of Point 27.3.3 above, the lessor must return the lessee the asset insurance money, provided that the lessee has fully paid the rent to the lessor and the lessor has received insurance money from the insurance agency.

27.4.4. The lessor's ownership over leased assets throughout the lease term shall not be affected in cases where the lessee goes bankrupt, dissolves or loses its solvency. The leased assets must not be considered assets of the lessee when the lessee's assets are handled to pay debts to other creditors.

28. Finance:

28.1. A fiscal year of a financial leasing company starts on January 1 and ends on December 31 of the calendar year. The first fiscal year shall start from the operation inauguration date and end by the end of December 31 of the calendar year.

28.2. Financial revenues and expenditures of financial leasing companies shall strictly comply with current provisions of law on financial regime for credit institutions.

29. Cost-accounting: The cost-accounting work of financial leasing companies shall strictly comply with the provisions of the Credit Institution Law, the Law Amending and Supplementing a Number of Articles of the Credit Institution Law and the cost-accounting regime promulgated by the State Bank.

30. Setting up and use of funds:

30.1. The fiscal year's earned profits of a financial leasing company constitute its business results after the payment of taxes prescribed by law;

30.2. The setting up and use of funds of financial leasing companies shall comply with current provisions of law on financial regimes for credit institutions;

30.3. Financial leasing companies must not use funds specified at Point 30.2 above to pay interests or for distribution to owners in any form, except for cases where they are dissolved or liquidated (for this case, the payment of debts shall take priority over distribution to owners).

31. Deduction for reserves:

Financial leasing companies may make deductions for risk reserves and use such reserves according to the State Bank's regulations and other provisions of law.

32. The transfer of profits and assets upon liquidation or termination of overseas operations of foreign parties to joint-venture financial leasing companies or financial leasing companies with 100% foreign capital must comply with the provisions of the Credit Institution Law and current law.

33. Information and reporting regime:

33.1. Financial leasing companies shall follow information and reporting as well as statistical regimes under current regulations and guidance of the State Bank. Their reports must be expressed in Vietnamese language and Vietnam dong.

33.2. Within 30 (thirty) days after the end of a fiscal year, financial leasing companies must make and send reports on their organization and operation situation and business plans to the State Bank (the Department for Banks and Non-Bank Credit Institutions).

34. Audit:

34.1. Within 30 (thirty) days before the end of a fiscal year, a financial leasing company must select an independent audit organization which fully meets the conditions under the State Bank's regulations to audit its activities. The selection of independent audit organizations shall comply with the provisions of the bidding law.

34.2. Within 120 (one hundred and twenty) days after the end of a fiscal year, financial leasing companies must each send 02 (two) audited financial statements to the State Bank (the State Bank Inspectorate and the Department for Banks and Non-Bank Credit Institutions) and must publicize the financial statements in accordance with the provisions of law.

34.3. Within 180 (one hundred and eighty) days after the end of a fiscal year, joint-venture financial leasing companies and financial leasing companies with 100% of foreign capital must send to the State Bank financial statements of foreign credit institutions that have contributed capital.

35. Inspection:

35.1. Financial leasing companies shall be subject to inspection by the State Bank.

35.2. The State Bank's inspection over operations of financial leasing companies shall comply with the provisions of the Credit Institution Law, the Law Amending and Supplementing a Number of Articles of the Credit Institution Law and the provisions of law on inspection of credit institutions.

35.3. Inspection, supervision by foreign parties: Foreign credit institutions contributing capital to financial leasing companies with 100% foreign capital operating in Vietnam shall be entitled to inspect and conduct internal audit of all operations of the financial leasing companies with 100% foreign capital in Vietnam. Before conducting inspection or internal audit, foreign credit institutions must notify the State Bank in writing of the contents and expected starting and ending time of such inspection or internal audit. Within 30 (thirty) days after the end of the inspection or internal audit, foreign credit institutions must send reports on inspection and audit results to the State Bank.

36. The special control, bankruptcy, dissolution and liquidation of financial leasing companies shall comply with the provisions of the Credit Institution Law, the Law Amending and Supplementing a Number of Articles of the Credit Institution Law and relevant provisions of law.

37. The commendation and handling of violations of financial leasing companies shall comply with the provisions of Chapter X of the Credit Institution Law and relevant documents.

38. Responsibilities of units attached to the State Bank:

38.1. The State Bank's provincial/municipal branches:

To receive and consider dossiers of application for establishment and operation licenses to joint-stock financial leasing companies and approve changes in financial leasing companies strictly according to the order and procedures provided for in this Circular.

38.2. The Department for Banks and Non-Bank Credit Institutions:

a/ To receive and evaluate dossiers of application for establishment and operation licenses of financial leasing companies and approve changes in financial leasing companies strictly according to the order and procedures provided for in this Circular;

b/ To coordinate with relevant departments of the State Bank for submission to the Governor for consideration of the grant of establishment and operation licenses to financial leasing companies and approve requests for their changes.

c/ To study for submission to the State Bank Governor for promulgation the following regulations:

- Regulations guiding operation leasing activities.

- Regulations guiding purchase and sublease activities in the form of financial lease.

- Regulations guiding the sale of collectibles.

38.3. The State Bank Inspectorate:

a/ To coordinate with, and provide the Department for Banks and Non-Bank Credit Institutions with information on the operation of financial leasing companies, propose issues related to the grant of establishment and operation licenses to financial leasing companies as well as issues related to the addition of their professional operations and changes.

b/ To supply reports on the results of inspection and supervision of financial leasing companies to the Department for Banks and Non-Bank Credit Institutions.

38.4. The Department for Monetary Policies:

To study and submit to the State Bank Governor for promulgation regulations guiding financial leasing activities and consignment service activities related thereto.

38.5. The Credit Department:

To study and submit to the State Bank Governor for promulgation regulations guiding capital consolidation leasing activities and guarantee activities related to financial lease.

38.6. The Accounting and Finance Department:

To guide the cost-accounting of bookkeeping operations of financial leasing companies.

39. This Circular takes effect 15 days after its publication in "CONG BAO." The following documents shall cease to be effective:

- The State Bank Governor's Circular No. 08/2001/TT-NHNN of September 6, 2001, guiding the implementation of the Government's Decree No. 16/2001/ND-CP of May 2, 2001, on organization and operation of financial leasing companies;

- The State Bank Governor's Circular No. 07/2004/TT-NHNN of November 1, 2004, amending Point 17.2 of Circular No. 08/2001/TT-NHNN of September 6, 2001, guiding the implementation of the Government's Decree No. 16/2001/ND-CP of May 2, 2001, on organization and operation of financial leasing companies.

40. The director of the office, the director of the Department for Banks and Non-Bank Credit Institutions, the heads of the units attached to the State Bank of Vietnam, the directors of the State Bank's provincial/municipal branches, the chairmen of the Managing Boards, and the general directors (directors) of financial leasing companies shall, within the ambit of their tasks and powers, have to organize the implementation of this Circular.