Applicability of Vietnam Anti-Money Laundering Law (AML) to offshore financial institutions

Under the AML Law 2012, an entity will be subject to the requirement to conduct KYC or submit AML reports to the SBV if it is, among others, a finance organisation which is “licensed” to conduct one or more financial services or activities. It is not clear from the AML Law 2012 and its implementing regulations if the term “licenced” above refers to the finance organisations licensed by an authority of Vietnam or also includes foreign finance organisation licensed by a foreign authority. However, it should be reasonable to take the first interpretation because:

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Written by Nguyen Quang Vu On In

Foreign governing law for contracts between foreign-owned companies in Vietnam

For contracts between a foreign-owned company (i.e., companies which are owned and controlled by foreign investors) and other companies in Vietnam, the default position is that Vietnamese law is the governing law. However, there are certain arguments or mechanisms to allow the parties to choose foreign governing law (e.g., English law) for such contracts. Such arguments or mechanism may become important if the foreign-owned company plans to raise financing including non-recourse from foreign lenders based on the cash-flow generated from such contracts (e.g., a power purchase agreement with Vietnam Electricity).

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Written by Nguyen Quang Vu On In ,

Raising operating capital of a general finance company

1. At law, general finance company is defined as a finance company, which is permitted to carry out activities under the Credit Institutions Law 2010. Under the Credit Institutions Law 2010, a finance company is permitted to raise operating capital under the following forms provided that such forms of capital raising are clearly specified in the finance company’s establishment and operation license:

1.1.1. Receipt of deposits from organizations;

1.1.2. Issuance of deposit certificates (chứng chỉ tiền gửi), promissory notes (tín phiếu), debentures (kỳ phiếu) and bonds (trái phiếu) (Valuable Papers) in order to raise capital from organizations; and

1.1.3. Borrowing from both domestic and foreign credit institutions and financial institutions, and from the State Bank of Vietnam (SBV) in the form of refinancing.

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Written by Lawyers VNLaw On In

Regulations Governing Debt Sale And Purchase Business Activity

1. Currently, the debt sale and purchase activity of entities not being credit institutions is no longer a conditional business activity. Specifically, the Law on Investment of the National Assembly dated 17 June 2020 (Investment Law 2020) has removed the business line of “debt sale and purchase” from the list of industries and trades in which business investment is conditional. Under the explanation of the drafting committee of the Investment Law 2020, the subject of a debt sale and purchase transaction can be any business entity, the debt sale and purchase service is only a supporting service which helps to promote the debt sale and purchase transactions, and the current system of the civil and commercial law relating to the sale and purchase activities have sufficient regulations to govern the debt sale and purchase transactions as well as the transactions supporting the debt sale and purchase

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Written by Lawyers VNLaw On In