Under the Law on Credit Institution 2010,

• a major shareholder of a joint stock commercial bank in Vietnam (VN Bank) is a shareholder, who owns directly or indirectly at least 5% of the total voting shares of the VN Bank. Indirect ownership is defined as an organization or individual owning the charter capital or shareholding capital of a credit institution via a related person or trust investment; and
• a SBV’s approval is required for “transfer of shares by a major shareholder” or “transfer of shares resulting in a major shareholder becoming a non-major shareholder and vice versa”.

Under the definition of a “major shareholder”, a holding company (Parent Co), which indirectly owns shares in a VN Bank through one of its subsidiaries (Sub Co) could be considered as a major shareholder of the VN Bank if the aggregate shareholding is 5% or more. However, in that case, it is not clear:

• whether Sub Co or Parent Co or both are considered as major shareholders of the VN Bank. And if the Parent Co only owns a part of Sub Co, then whether the indirect shareholding of the Parent Co in the VN Bank should be calculated with reference to the shareholding of the Parent Co in Sub Co; and
• whether a transfer of shares in Sub Co by a Parent Co is considered as a transfer of shares in VN Bank and is subject to SBV’s approval.

On the first issue, if only Sub Co or Parent Co is considered as the major shareholder of the VN Bank, then the holding of the remaining entity in the VN Bank is not regulated. Therefore, logically, both Parent Co and Sub Co should be considered together as a single major shareholder. In addition, considering Parent Co and Sub Co together as a single major shareholder will remove the need to calculate the indirect shareholding of Parent Co in the VN Bank.

On the second issue, it is reasonable to consider that (1) only transfer of shares in the VN Bank by Sub Co could trigger an SBV’s approval, and that (2) a transfer of shares in Sub Co by Parent Co is not a transfer of shares in VN Bank. This is because:

• the shares referred to the provision regarding transfer of shares should be shares in the VN Bank. This is because a Sub Co and Parent Co may not have shares;
• the applicant for the SBV’s approval is the VN Bank. It would be unreasonable to require the VN Bank to be aware of a transfer of shares in Sub Co and to apply for the SBV’s approval; and
• while there is definition of indirect ownership, there is no definition of indirect transfer under the Law on Credit Institution 2010.

If the above interpretation is adopted, then the Parent Co may transfer all of its shares in Sub Co without triggering an approval by the SBV.

This post is contributed in parts by Luu Hoang Hai from Venture North Law Limited.