Tighten cross-ownership and bank manipulation from July 1, 2024

The National Assembly decided to pass the amended Law on Credit Institutions on January 18, 2024, effective from July 1, 2024. Accordingly, the newly amended law provides regulations related to preventing cross-ownership, manipulation and domination in banking activities of credit institutions.

Reduce the ownership ratio of shareholders and related parties

According to the report of the State Bank sent to the National Assembly at the 7th Session of the 15th National Assembly, the ownership of shares exceeding the limit, cross-ownership between credit institutions, credit institutions and enterprises after being processed has decreased significantly compared to previous periods. However, the problem of handling cross-ownership becomes difficult in cases where major shareholders and related persons of major shareholders intentionally conceal, ask other individuals/organizations to stand in their names to own shares to circumvent the provisions of the law, leading to the credit institution being controlled by these shareholders, potentially causing the risk of operating without publicity and transparency.

Accordingly, to prevent the above situation, the Law on Credit Institutions 2024 has reduced the share ownership ratio of shareholders in credit institutions compared to the old law as follows:

An individual shareholder may not own shares exceeding 05% of the charter capital of a credit institution. An organizational shareholder may not own shares exceeding 10% (previously 15%) of the charter capital of a credit institution. A shareholder and his/her related persons may not own shares exceeding 15% (previously 20%) of the charter capital of a credit institution. A major shareholder of a credit institution and his/her related persons may not own shares of 0.5% or more of the charter capital of another credit institution.

Public disclosure of information of shareholders and related parties

Previously, the Law on Credit Institutions 2010 stipulated that credit institutions must publicly disclose related interests of members of the Board of Directors, Board of Members, Board of Supervisors, General Director/Director, Deputy General Director/Director and equivalent positions.

In addition, the 2019 Securities Law also stipulates that shareholders of credit institutions holding 5% or more of capital must disclose information.

However, according to the Law on Credit Institutions 2024, groups of shareholders owning 1% or more of charter capital are also required to declare information.

The new law also stipulates that individuals related to shareholders must also declare transparent information. These individuals include: subsidiaries of subsidiaries of credit institutions; grandparents, grandchildren, aunts, uncles, nieces, nephews, nieces, nephews, and vice versa.

Resolutely tighten cross-ownership and bank manipulation

According to the State Bank, in the future, it will continue to monitor the safety of credit institutions' operations and through inspections of capital, share ownership of credit institutions, lending, investment, and capital contribution activities... In case of detecting risks or violations, this agency will direct credit institutions to handle existing problems to prevent them.

In cases where signs of crime are detected, the State Bank will consider transferring them to the police agency for investigation, clarifying violations of the law (if any) and conducting investigation and handling.

Source: https://laodong.vn/kinh-doanh/siet-chat-tinh-trang-so-huu-cheo-thao-tung-ngan-hang-tu-172024-1358767.ldo