Banks must publicly disclose shareholders holding 1% or more of charter capital.

Transaction at a commercial bank. Photo: Giang Huy — Transaction at a commercial bank. *Photo: Giang Huy*

This content is in the Law on Credit Institutions (amended) passed by the National Assembly on January 18. Accordingly, from July 1, 2024 when this law takes effect, banks must comply with many stricter regulations on shareholder ownership ratios as well as information transparency.

According to the Law on Credit Institutions issued in 2010 (current), banks only have to disclose information about members of the board of directors, supervisory board, executive board and related persons... Banks listed on the stock market have additional provisions in the Securities Law to disclose information to major shareholders and related persons holding 5% or more of capital. However, the recently passed amended Law on Credit Institutions requires the full names of individuals and organizations that are shareholders owning 1% or more of charter capital and related persons to be disclosed on the bank's website.

Annually, credit institutions shall disclose this information to the General Meeting of Shareholders, General Meeting of Members, and Board of Members of the credit institution.

In addition, "related persons" under the amended Law on Credit Institutions are also expanded to include parents, adoptive parents, stepfathers, stepmothers, parents-in-law, parents-in-law; adopted children, sons-in-law; half-siblings; brothers-in-law, sisters-in-law, brothers-in-law, brothers-in-law, sisters-in-law of the same parents or half-siblings.

In addition, paternal and maternal grandparents; grandchildren; paternal and maternal uncles, paternal and maternal aunts, paternal and maternal uncles, and paternal and maternal nieces and nephews are also considered "related persons" under the new Law.

Other legal entities and individuals with potential risk relationships to the operations of credit institutions as determined by the bank's internal regulations or at the request of the State Bank through inspection and supervision are also considered "related persons".

Another important point in the revised Law on Credit Institutions is the reduction of the ownership limit for institutional shareholders (including shares that such shareholders indirectly own) from 15% to 10%; for shareholders and related persons from 20% to 15%. The ownership limit for individual shareholders remains the same as the current 5%.

From July 1, shareholders and related persons owning shares exceeding the ceiling under new regulations will still be maintained but will not be allowed to increase, except in the case of receiving dividends in shares.

New regulations - reducing the ownership ratio of shareholder groups or information transparency with shareholders holding 1% or more of capital - aim to limit the situation of backyard businesses dominating bank operations.

In fact, the percentage of individuals and organizations holding shares in banks or borrowing capital can be easily counted and monitored. However, the real owners who hold controlling power are not revealed in the records if they ask or hire someone to hold shares on their behalf or set up "ghost" enterprises to borrow capital. The investigation results at Saigon Bank (SCB) clearly show this situation.

The State Bank also acknowledged that it is difficult to have any regulations to handle the issue thoroughly, but it is necessary to handle it comprehensively, including the contents of the revised Law on Credit Institutions and other solutions such as connecting national data on population, business registration as well as coordination of relevant state management agencies, inspection, investigation and auditing agencies.

HA (according to VnE)

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