Contents
Article 2.Principles for the Establishment of Commercial Banks and Branches of Commercial Banks
SECTION II: ESTABLISHMENT OF FOREIGN COMMERCIAL BANKS AND BRANCHES OF COMMERCIAL BANKS
Article 3. Commercial Banks Establishment Shareholding
Article 4.Applications for Establishment
Article 5.Submission of Application Documents
Article 6.Consideration of Establishment Applications
Article 7. Issue of Temporary License
Article 8.Issue of Permanent Establishment Licenses
Article 9.Converting a Foreign Commercial Bank Branch into a Commercial Bank
SECTION III:THE ESTABLISHMENT OF DOMESTIC BRANCHES OF COMMERCIAL BANKS AND SERVICE POINTS
Article 10.Applications for the Establishment of Domestic Commercial Banks
Article 11.Establishment of Domestic Service Points
Article 12.Converting a Service Point into a Domestic Commercial Bank Branch
Article 13.Implementation of the Laws of the Lao PDR
Article 14.Applications and Reporting relating to Changes to Shareholders and Directors
Lao People’s Democratic Republic
Peace Independence Democracy Unity Prosperity
Bank of the Lao PDR No. 42/BOL
Vientiane Capital, Date 15 JAN 2016
DECISION
ON THE ESTABLISHMENT OF COMMERCIAL BANKS BRANCHES
OF COMMERCIAL BANKS
The Governor of the Bank of the Lao PDR issues the following Decision:
GENERAL PROVISIONS
This Decision determines the principles and regulations regarding the establishment of commercial banks and branches of commercial banks in the Lao PDR in order to be a reference for applications and the consideration of the establishment, in order to ensure that commercial banks and branches of commercial banks authorised to be established are strong and stable, able to actively contribute to the development of the national socio-economy and link regionally and internationally.
Article 2.Principles for the Establishment of Commercial Banks and Branches of Commercial Banks
The establishment of domestic and foreign commercial banks and branches of commercial banks shall be authorised by the Bank of the Lao PDR.
The Bank of the Lao PDR will not consider applications for the establishment of intangible banks and intangible applicants.
ESTABLISHMENT OF FOREIGN COMMERCIAL BANKS AND BRANCHES
OF COMMERCIAL BANKS
Article 3. Commercial Banks Establishment Shareholding
Individuals and legal entities may be shareholders in the establishment of commercial banks, but therein, one or more establishing shareholder banks must hold more than 50% (fifty percent) of the total voting shares. A single establishing individual may hold not more than 10% (ten percent) of the total voting shares. Domestic and foreign commercial banks may establish group banks in the Lao PDR holding shares up-to 100% (one hundred percent) of the group bank and may establish branches as provided in this Decision.
Shareholders which are individuals or legal entities may not have any material interest in more than two banks established in the Lao PDR, except in the case of holding shares to strengthen the weak banks as authorised by the Bank of the Lao PDR.
Any Individual shareholder who has a relationship with or is relative with any other individual shareholder to in the banks, regardless of whether such relationship is horizontal or vertical shall be deemed as a single same individual and shall be subject to the limitations of shareholding by individuals as defined in Paragraph 1 of this Article.
Article 4.Applications for Establishment
Applications for the establishment of foreign commercial banks or branches of foreign commercial banks shall include the following documents:
4.1 General Documents
Article 4.2Specific Documents for Applicants that are Legal Entities
Article 4.3 Specific Documents for Applicants that are Individuals
4.4 Specific Documents for Persons to be Appointed as Directors
4.5 Applications for the establishment of foreign branches,
Article 4.1 (excluding Items 5 and 6), Articles 4.2 and 4.4 of this Article shall be implemented. An original of a resolution of the Board of Directors, a meeting of shareholders or the authority of the establishment applicants regarding the approval of the documents determined in Article 4.1 (Items 1 to 4) and the appointment of the first management committee and an agreement1 of the parent bank for the performance of debt obligations of the branch established in the Lao PDR.
Documents evidencing funding sources used for the establishment of the bank shall include the last 6 months bank statements of the establishing shareholders issued by the bank where the accounts are held, statements detailing the sources of such funds and relevant certification of such.
The establishment application shall be submitted in Lao language. Documents translated from foreign languages into Lao shall be certified by the Notary Organization of the Lao PDR. Documents and copies shall be legible.
Article 5.Submission of Application Documents
Foreign commercial bank or branches of commercial bank establishment applications shall be submitted through the One Stop Investment Office for general activities at the Industry and Commerce Sector. After receipt of the establishment application from such Sector, the Bank of the Lao PDR will consider the establishment application as provided in this Decision.
Article 6.Consideration of Establishment Applications
After complete and correct establishment application documents are received in accordance with this Decision, the Bank of the Lao PDR will consider the establishment application documents and notify the establishment applicants in writing within 90 (ninety) days of receipt of complete and correct establishment application documents.
The Bank of the Lao PDR will inspect the completeness and correctness of the application documents and fulfillment of the conditions for establishment as provided in this Decision.
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1The intent of the Lao term used is probably guarantee.
Article 7. Issue of Temporary License
The Bank of the Lao PDR will issue a temporary license to the establishment applicants if the documents are complete and correct as provided in Article 4 of this Decision, the business plan is good and reasonable and the following conditions are fulfilled:
7.1 For Establishment Applicants that are Banks:
7.2 For Establishment Applicants that Legal Entities that are not Banks:
7.3 For Establishment Applicants that are Individuals:
7.4 For Directors:
A recipient of a temporary establishment license may not operate the business, but may use such proof for reference for implementation of the conditions precedent provided in Article 8 of this Decision.
A recipient of a temporary establishment license shall open a registered capital account or investment account with the Bank of the Lao PDR and shall source the registered capital or investment funds in full after receipt of the temporary establishment license. The registered capital or investment funds in a foreign currency shall be converted into Kip on the date that the Bank of the Lao PDR issues a permanent establishment license at the buying rate of the Services Department of the Bank of the Lao PDR. Payment of the registered capital or investment funds shall be undertaken through the banking system regardless of whether the funding sources are derived domestically or from abroad and cash payments are prohibited.
A temporary establishment license is valid for 180 (one hundred and eighty) days from the date of authorization. A recipient of a temporary establishment license shall complete the conditions precedent provided in Article 8 of this Decree. In the event that the performance of such conditions has progressed, but remain unfulfilled within 180 days, the term may be extended for additional terms of 90 (ninety) days, but such shall not exceed two extensions. If the conditions precedent remain unfulfilled within such term, the temporary establishment license will be invalid.
The Bank of the Lao PDR will consider the conditions precedent of license recipients or bank directors in order to supress crimes and persons involved in crimes from receiving licenses or appointed as bank directors. In such considerations, the Bank of the Lao PDR will consider the criminal records and involvement in crimes and all negative information that any domestic or foreign organization discovers.
After a recipient of a temporary establishment license has fulfilled the conditions precedent, the Bank of the Lao PDR will be requested to undertake an on-site inspection in order to consider the issue of a permanent establishment license.
Article 8.Issue of Permanent Establishment Licenses
The Bank of the Lao PDR will issue a permanent establishment license to the establishment applicant within 10 (ten) business days if the following conditions precedent are fulfilled:
tight and complete Articles of Association.
A recipient of a permanent establishment license shall pay fees in full in accordance with the regulations issued by the Bank of the Lao PDR and the enterprise shall be registered and the business shall be operational within 90 (ninety) days of receipt of the Enterprise Registration Certificate.
Article 9.Converting a Foreign Commercial Bank Branch into a Commercial Bank
The conversion of a foreign commercial bank branch into a commercial bank shall be performed in full in the same manner as the establishment of commercial banks as provided in Section II of this Decision.
THE ESTABLISHMENT OF DOMESTIC BRANCHES OF
COMMERCIAL BANKS AND SERVICE POINTS
Article 10.Applications for the Establishment of Domestic Commercial Banks
Commercial banks that have received permanent establishment licenses may establish branches in the Lao PDR after fulfilment of the following conditions:
Branch establishment applicants shall submit the following application documents:
The establishment application shall be submitted in Lao language. Documents translated from foreign languages into Lao shall be certified by the Notary Organization of the Lao PDR. Documents and copies shall be legible.
The application documents shall be submitted to the Bank of the Lao PDR for consideration in accordance with the above conditions. The Bank of the Lao PDR will notify the establishment applicant in writing of its decision in principal or refusal of the branch establishment application within 60 (sixty) days of receipt of the application documents in full. In the event that the Bank of the Lao PDR agrees in principal to the establishment of the branch, the establishment applicant shall complete preparations within 180 (one hundred and eighty) days, and an extension of 90 (ninety) days pay be applied for with due reason.
After completion of preparations, the Bank of the Lao PDR shall be requested to perform an on-site inspection in order to issue a branch establishment license.
Article 11.Establishment of Domestic Service Points
Commercial banks that have received permanent establishment licenses may establish service points, but the Bank of the Lao PDR shall be notified in writing within 15 (fifteen) days of establishment and attach the resolution of the Board of Directors regarding the approval of the establishment of the service point and management regulations of the service point. The management regulations of the service point shall include the following:
The service point shall commence services within 15 days from the date that the Bank of the Lao PDR receives written notification of the establishment of such service point as provided in Paragraph One of this Article.
The bank service point may offer deposit services, cash withdrawal services, customer transfer services, foreign exchange services, but may not approve credit facilities to customers.
Foreign commercial banks may not expand service points and foreign exchange shops.
Article 12.Converting a Service Point into a Domestic Commercial Bank Branch
The conversion of a service point into a domestic commercial bank branch shall be performed in the same manner as the establishment of domestic commercial bank branches as provided in Section III of this Decree.
OTHER PROVISIONS
Article 13.Implementation of the Laws of the Lao PDR
The establishment of commercial banks, branches of commercial banks, and commercial bank service points in the Lao PDR shall be performed in accordance with this Decision and other relevant laws and regulations of the Lao PDR, such as: erection of bank signs, use of seals, construction applications, etc. as determined by the relevant Sectors.
Article 14.Applications and Reporting relating to Changes to Shareholders and Directors
Changes to major shareholders of commercial banks shall be authorized by the Bank of the Lao PDR. Such changes shall be consistent with the shareholding provided in Article 3 of this Decision, [the application shall be] fulfilled in accordance with the conditions and attached with supporting documents as the same requirements of applicant’s establishing application as provided in Article 4, Item 4.2 or 4.3 and Article 7, Items 7.1, 7.2 or 7.3 of this Decision and be submitted to the Bank of the Lao PDR for consideration.
Changes to directors of foreign commercial banks or branches of foreign commercial banks shall be authorized by the Bank of the Lao PDR and [the application shall be] fulfilled in accordance with conditions and attached with supporting documents as same requirements of directors appointment application provided in Article 4, Item 4.4 and Article 7, Item 7.4 of this Decision and be submitted to the Bank of the Lao PDR for consideration.
Foreign commercial banks and branches of foreign commercial banks shall immediately notify the Bank of the Lao PDR regarding changes that may result in major shareholders or directors failing to meet the conditions provided in Article 7, Items 7.1, 7.2 or 7.3 as the case may be of this Decision.
This Article applies to all commercial banks established prior to or after this Decision becomes effective.
FINAL PROVISIONS
The Department of the Management of Commercial Banks, relevant departments of the Bank of the Lao PDR, commercial banks and other relevant legal entities shall strictly implement this Decision.
This Decision shall be effective 15 (fifteen) days after publication in the Government Gazette of the Lao PDR. All previous regulations regarding the establishment of commercial banks and branches of commercial banks issued and implemented by the Bank of the Lao PDR that conflict with this Decision are hereby repealed.
Governor of the Bank of the Lao PDR
[signature and seal]
Dr. Somphaw PHAISIT
Name | Description | Status |
---|---|---|
Requirement for approval to establish domestic and foreign commercial banks | The establishment of domestic and foreign commercial banks and branches of commercial banks must be authorised by the Bank of the Lao PDR. | Active |
Requirement for authorization for change in major shareholders | Changes to major shareholders of commercial banks and to directors of foreign commercial banks or their branches must be authorised by the Bank of Lao PDR. | Active |
Requirement for foreign commercial banks when applying for general activities | Foreign commercial bank or branches of commercial bank establishment must submit applications through the One Stop Investment Office for general activities. | Active |
Requirement for maximum shareholdings | Shareholdings in commercial banks must not be material interest in more than 2 banks established in the Lao PDR. | Active |
Requirement for recipient of a temporary establishment licence to open account | A recipient of a temporary establishment license must open a registered capital account or investment account | Active |