Authorisation In Opening And Using Bank Account Of Representative Office

While it is common in practice for the Chief Representative of a Representative Office (RO) to act on behalf of the RO in opening and using the RO's bank account, there are instances where the parent company may wish to authorize another person (Authorized Person) to handle these matters. The key question is the validity of such authorization and whether the Chief Representative's acknowledgment of such Power of Attorney (POA) should be sought.

Short answer: The authorization for the Authorized Person should originate from the RO, not the parent company. If the authorization is granted by the parent company, it should be recognized by the Chief Representative as the "legal representative" of the RO. This acknowledgment would then serve as a concurrent authorization by the RO.

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Written by Nguyen Quang Vu On In

New Law on Credit Institutions 2024 (Part 1)

Introduction

On 18 January 2024, new Law on Credit Institutions (LCI 2024) has been passed by the National Assembly. LCI 2024 will replace the Law on Credit Institutions 2010 (as amended) (LCI 2010) from 1 July 2024. In a series of posts, we will introduce the new changes of LCI 2024.

It seems that the ongoing criminal case against the controlling shareholders of Saigon Commercial Bank (SCB) has motivated the draftsman of LCI 2024 to introduce stricter management toward credit institutions (CIs).

Stricter conditions of independent board members

LCI 2024 tightens the standards and conditions of independent members of the Board of Directors of CIs. Specifically, an independent member of the Board of Directors of a CI must not represent ownership of any share of such CI and not, together with his/her related persons, directly or indirectly own 1% or more of the charter capital of such CI.

A broader range of related persons

LCI 2024 expands the definition of related persons to also cover the relationship between (i) the “grandparent” company/CIs and the “grandchildren” company, (ii) the manager/controller of a parent company/CIs and the subsidiary, and (iii) an individual with his/her wider range of family members.

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Status Of Partially Secured Creditors Under Law On Bankruptcy 2014

Under the Law on Bankruptcy 2014, creditors (chủ nợ) of a bankrupt enterprise include unsecured creditors, partially secured creditors (chủ nợ có bảo đảm một phần) and secured creditors (chủ nợ có bảo đảm). While it is not entirely clear, it appears that partially secured creditors are considered as a separate class of creditors and have their own rights during a bankruptcy proceeding.

Under the Law on Bankruptcy 2014,

  • a secured creditor is defined as a creditor having the right to require the relevant bankrupt enterprise to perform an obligation to repay a secured debt with the assets of the enterprise or a third party; and

  • a partially secured creditor is defined as a creditor having the right to require the relevant bankrupt enterprise to perform an obligation to repay a secured debt with the assets of the enterprise or a third party “where the value of such assets is less than that debt”.

The definition of a secured creditor does not clearly refer to “fully secured creditors” since it does not require the value of the secured assets is equal or more than the debt owed to a secured creditor. Accordingly, technically, the term “secured creditor” could cover both partially secured creditor and fully secured creditor. That said, a more in-depth reading of the Bankruptcy Law 2014 suggests that partially secured creditors are treated as a separate class of creditors. However, it is not clear whether this distinction is created by design or by chance by the draftsman of the Bankruptcy Law 2014.

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Possibility to apply term deposit interest to security deposit (ký quỹ)

At law, enterprises engaging in certain special business lines (e.g. labour outsourcing service, employment services, etc.) (Security Deposit Enterprise) are required to place a security deposit at a licensed bank in Vietnam (Custodian Bank) before conducting the relevant businesses (Security Deposit). The Security Deposit is subject to strict control regulations (e.g. it can only be withdrawn or released in specific cases upon being approved by a competent authority). While the term of the Security Deposit could be long (e.g. more than one year), it is not entirely clear from the law whether the Custodian Bank can establish the Security Deposit as a term deposit and apply the respective interest rate.

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Written by Lawyers VNLaw On In