Regulations on deposit of multi-level sale enterprises

Decree No. 40/2018/ND-CP (“Decree 40“) dated March 12, 2018 on the management of business activities by multi-level method takes effect, raising the deposit amount for multi-level sale enterprises compared with the old regulations in Decree 42/2014/ND-CP which has expired. Accordingly, the deposit that multi-level sale enterprises must comply with the new regulation is “equivalent to 5% of charter capital but not less than VND 10 billion” at a commercial bank or foreign bank branch in Vietnam.

On November 30, 2018, the State Bank of Vietnam issued Circular No. 29/2018/TT-NHNN (“Circular 29“) guides the verification and management of deposits of multi-level sale enterprises.  Circular 29 has clearly defined deposit regulations in addition to the provisions of Decree 40.

Namely, Clause 1, Article 3 of Circular 29 specifies the main contents of the deposit contract between the escrow bank and multi-level sale enterprise including: Name, address, legal representative of enterprise; Name, address, legal representative of the bank (or bank branch) receiving the deposit; deposit amount; Purpose of deposit; Deposit interest rate; Forms of payment of deposit interests; Use of deposit; Withdrawal of deposit; Deposit account balance; Responsibilities of relevant parties and other contents in accordance with the provisions of law. In addition, Article 3 of the above Circular also stipulates the procedures in case the enterprise changes the information on the Escrow Confirmation or if the enterprise changes its charter capital and needs to adjust the deposit amount.

The deposit interest rate for the above deposit is also stipulated in Article 5 of Circular 29. Regarding, the deposit interest rate will be agreed by the two parties in the deposit contract but shall comply with regulations on interest rates of Vietnam Dong deposits of the State Bank of Vietnam from time to time.

Additionally, Circular 22 clearly recognizes the responsibility of the deposit receiving bank in Article 8 and related units of the State Bank of Vietnam, including the Department of Payment, Banking Supervision Agency, State Bank branches in provinces and municipalities in Article 9 in the performance of deposit of multi-level sale enterprises. Therefore, it enhances the responsibilities of agencies and organizations relating to the implementation of deposit regulations to protect the rights and interests of escrow banks, multi-level sale enterprises and multi-level sale participants.

Hence, in addition to the deposit regulations in Decree 40, Circular 29 clarified deposit issues to facilitate escrow banks and multi-level sale enterprises in compliance with specialized law on multi-level sale.