Decree 69: Key Changes to Foreign Shareholding in Vietnamese Credit Institutions
21/04/2025 09:00
Decree 69: Key Changes to Foreign Shareholding in Vietnamese Credit Institutions
On 19 March 2025, the Government issued Decree No. 69/2025/ND-CP (Decree 69) amending and supplementing specific provisions of existing Decree No. 01/2014/ND-CP dated 3 January 2014 (Decree 01) on foreign investors' purchase of shares in Vietnamese credit institutions (including joint-stock credit institutions and credit institutions that have been converted into joint-stock credit institutions).[1] In general, Decree 69 has been promulgated with a view to:
- Clarifying the scope of regulation and the subjects of application in light of recent significant developments in the legal framework concerning investment, enterprises, and credit institutions; and
- Establishing a legal framework for attracting, controlling, and supervising foreign investment capital during the restructuring of the credit institution system, particularly concerning weak banks and those subject to compulsory transfer.
Decree 69 will officially take effect on 19 May 2025, requiring all share purchase activities by foreign investors in Vietnamese credit institutions to fully comply with the latest regulations as discussed below.
1. Expanding the scope of regulation and subjects of application
Compared to Decree 01, Decree 69 significantly revises the scope of regulation in two key aspects, to align with the Law on Investment, the Law on Securities, and other relevant legislative developments, specifically as follows:[2]
- The cap on the maximum foreign shareholding ratio now includes the aggregate holdings of a foreign investor and its related persons in a Vietnamese credit institution, rather than applying only to the investor alone.
- Decree 69 extends its scope to foreign-invested economic organisations subject to the same conditions and investment procedures as foreign investors (Deemed Foreign Investors), requiring them to satisfy the same conditions and procedures as foreign investors when acquiring shares in Vietnamese credit institutions.
2. Clarifying the definitions of “foreign individual” and “foreign organisation”
Decree 69 introduces notable changes in the definitions and scope of application regarding “foreign individual” and “foreign organisation” as follows:[3]
- Foreign individual: Decree 69 expressly defines a foreign individual as a person with foreign nationality, thereby excluding stateless person(s) in comparison to the scope of application under Decree 01.
- Foreign organisation: Decree 69 defines a foreign organisation as an entity established under foreign law and engaging in business and investment activities in Vietnam.
3. Detailed provisions on weak and troubled credit institutions
In comparison to the ambiguous role of “weak credit institutions” which was only briefly mentioned under Decree 01 in the context of “special cases” subject under the Prime Minister’s decision, Decree 69 provides a clearer and more detailed framework for determining which credit institutions are considered weak or facing difficulties. Specifically, such institutions include:[4]
- Credit institutions placed under special control by the State Bank of Vietnam;
- Commercial banks subject to compulsory transfer; and
- Credit institutions classified as “weak” under the most recent assessment of the State Bank of Vietnam.
4. Conditions and limitations on the purchase of shares by foreign investors
Another notable change under Decree 69 is the amendment on foreign investors’ eligibility to purchase shares in joint-stock credit institutions. Accordingly, such permitted cases now include the following:[5]
- Purchasing shares from existing shareholders;
- Purchasing shares in case credit institutions conduct public offering, private placement to increase their charter capital or sell treasury stocks, which they purchase before 1 January 2021. This time restriction is an adjustment introduced by Decree 69.
- Purchasing shares in the case where credit institutions transform the legal form into joint-stock credit institutions.
Adjustment to the foreign shareholding limit
Decree 69 introduces a significant adjustment to the regulations on foreign shareholding limits in Vietnamese credit institutions, particularly in the context of restructuring weak banks through compulsory transfer. In contrast to Decree 01 – which only provided general ownership limits applicable uniformly across the entire credit institution system – Decree 69 sets out more differentiated and flexible shareholding limits, depending on the type of credit institution and the specific circumstances. The key changes are as follows:
Type of Credit Institution | Decree 01 | Decree 69 |
|---|---|---|
| Commercial Banks | Up to 30% of total charter capital, except for special cases where restructuring weak or struggling credit institutions is necessary to ensure the safety of the credit institution system, as decided by the Prime Minister.[6] | Up to 30% of total charter capital, except for:[7] (i) special cases as decided by the Prime Minister to ensure the safety of the credit institution system; or (ii) foreign investors’ total shareholding in a commercial bank, as a transferee bank[8] under an approved compulsory transfer plan, which may increase to a maximum of 49% during the plan’s validity; or (iii) the following transactions which are exclusively permitted after the mandatory transfer plan expires: (a) the transferee bank may offer shares to existing shareholders, or (b) foreign investors may transfer shares in the transferee bank under a specific agreement. Further acquisitions can resume only when total foreign shareholding falls below 30% of the bank’s charter capital. |
| Non-bank credit institutions | Subject to regulations applicable to public and listed companies | Up to 50% of total charter capital, except for special cases as decided by the Prime Minister to ensure the safety of the credit institution system.[9] |
The holdings specified above include the capital amount that foreign investors entrusted for other organisations and individuals to purchase shares.[10]
5. Mechanism for handling breaches of foreign shareholding limits
There is also a new legal mechanism to manage foreign shareholding exceeding limits, especially when credit institutions issue additional shares based on existing shareholder ratios. According to which, where a foreign investor subscribes to newly offered shares and such subscription results in a breach of the applicable foreign shareholding limit, the following measures shall apply:[11]
- In the event that a foreign investor (including or not including any related persons) exceeds the permitted shareholding limit:
- The foreign investor must reduce its shareholding to the permissible level within a maximum period of six (06) months from the date on which the limit was exceeded;
- Remedial measures may include the transfer of shares or the implementation of restructuring transactions to reduce the shareholding ratio.
- In the event that the aggregate foreign shareholding exceeds the prescribed limit: no foreign investor shall be permitted to acquire additional shares until the total foreign shareholding is brought back below the applicable threshold.
Please feel free to contact our Frasers team should you require further assistance or guidance in relation to Decree 69.
Click here to download: Legal Update - Decree 69 - Key Changes to Foreign Shareholding in Vietnamese Credit Institutions (EN) - April 2025.pdf
[1] Decree 01, article 2.1.
[2]Decree 69, article 1.1.
[3]Decree 69, article 1.2.
[4] Decree 69, article 1.3.
[5] Decree 01, article 6 as amended by Decree 69, article 1.4.
[6] Decree 01, articles 7.5 and 7.6.
[7] Decree 69, articles 1.5, 1.6, 1.7 and 1.12.
[8] Excluding those commercial banks over 50% of charter capital of which is held by the State.
[9] Decree 69, articles 1.5 and 1.6.
[10] Decree 69, article 1.8.
[11] Decree 69, article 1.11.
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