LAO PEOPLE’S DEMOCRATIC REPUBLIC
PEACE INDEPENDENCE DEMOCRACY UNITY PROSPERITY
|President’s Office||No. 02/PO|
LAO PEOPLE’S DEMOCRATIC REPUBLIC
On the Promulgation of the Law on Commercial Banks
Pursuant to Chapter 6, Article 67, point 1 of the Constitution of the Lao People’s Democratic Republic which provides for the promulgation of the Constitution and of laws adopted by the National Assembly;
Pursuant to Resolution No. 03/NA, dated 26 December 2006, of the National Assembly of the Lao People’s Democratic Republic regarding the adoption of the Law on Commercial Banks; and
Pursuant to Proposal No. 02/NASC, dated 10 January 2007, of the National Assembly Standing Committee.
The President of the Lao People’s Democratic Republic
Article 1. The Law on Commercial Banks is hereby promulgated.
Article 2. This decree shall enter into force on the date it is signed.
Vientiane, 16 January 2007
The President of the Lao People’s
[Seal and Signature]
LAO PEOPLE’S DEMOCRATIC REPUBLIC
PEACE INDEPENDENCE DEMOCRACY UNITY PROSPERITY
|National Assembly||No. 03/NA|
|26 December 2006|
This Law on Commercial Banks defines principles and regulations on the establishment, regulation and supervision of commercial banks located in the Lao People’s Democratic Republic in order to promote commercial banks to have effective, transparent and stable operations so as to be able to provide financial resources for production and business, and to make an important contribution to the fiscal stability and socio-economic development of the nation.
Commercial bank refers to an enterprise established under this law that engages in banking operations, namely, accepting deposits, extending credit, buying and selling foreign currencies, providing payment services and making investments.
Wherever used in this law, the following terms shall have the following meanings:
The State promotes and encourages domestic and foreign investors to establish and be involved in banking business by defining policies, regulations, and measures, and by providing data, information and other facilitation to strengthen the banking sector.
The State promotes commercial banks to invest and provide credit in order to support production, business, and creation of employment to increase the income of the people, and to develop a base for the industrialisation, modernisation, and socio-economic development of the nation.
Commercial banks shall protect the interests of depositors by:
Commercial banks that are established or that have business operations in the Lao PDR shall be equal under the laws and shall cooperate and compete with each other to expand production and business.
The State uniformly regulates commercial banks based on laws and regulations and the State protects the rights and legitimate benefits of commercial banks.
The State will not allow commercial banks to compete illegally so as to cause damage to other commercial banks, the banking system or the fiscal and monetary policies of the State.
Commercial banks shall have the independence to undertake their business operations under this law and other relevant laws.
This law shall apply to commercial banks, including branch offices of foreign commercial banks that have any establishments and operations in the Lao PDR.
The State promotes international cooperation in the banking business in various forms, such as: the exchange and sharing of experience, information and technology, and the development of human resources, so as to strengthen the banking system in the Lao PDR so that it can be integrated at a regional and international level.
Establishment and Organisational Structure of Banks
Any person or5 organisation that wishes to establish a commercial bank shall submit an application to the Bank of the Lao PDR.
The application file shall include:
A foreign commercial bank that wishes to establish its branch offices or affiliates in the Lao PDR shall have the consent in writing of its home country supervisor.
The applicant shall pay fees in accordance with regulations.
The Bank of the Lao PDR has the right to request that an applicant submit additional information for its license application if, in the opinion of the Bank of the Lao PDR, the basic information submitted is incomplete or insufficient.
After receiving an application, the Bank of the Lao PDR shall consider the application and respond to the applicant in writing within ninety days from the date of its receipt of the application for a license.
The Bank of the Lao PDR shall grant a preliminary license only if the applicant can satisfy the following conditions:
The Bank of the Lao PDR will issue a permanent license to the applicant within 10 official working days after the applicant has fulfilled additional conditions. The additional conditions are as follows:
If the applicant fails to comply, within 180 days, with the conditions mentioned in the third paragraph of this article, the preliminary license shall become void. In the event that the applicant has sound reasons for failure to comply with the conditions, the Bank of the Lao PDR may extend the term to comply with the conditions for another 90 days.
After receiving the final approval for a license, the applicant shall pay fees in accordance with regulations, register its enterprise in accordance with the Enterprise Law and undertake business operations within 180 days after receiving the enterprise registration certificate.
The Bank of the Lao PDR shall have the sole responsibility for issuing licenses to banks.
A commercial bank established under this law shall have a registered capital of not less than one hundred billion Kip.
Each branch of a foreign commercial bank established in the Lao PDR shall have investment capital of not less than fifty billion Kip.
The government may adjust the registered or investment capital from time to time, but they shall not be less than the amount stipulated in this article.
Article 14. Charter7
Each commercial bank shall have a charter that shall specify:
The charter of a commercial bank shall have legal effect only after it receives the written approval of the Bank of the Lao PDR.
A license shall be granted for an indefinite period of time. The person who receives the license shall use it correctly and shall not assign or transfer or give it to any other person to use.
The Bank of the Lao PDR shall keep data and information on the establishment of commercial banks for inspection by the public, which shall include:
In the event that the license of a commercial bank is revoked, the Bank of the Lao PDR shall delete [its] data and information from the file.
Organisational and Personnel Structures
A commercial bank shall be established and operated as any form of company in accordance with the Enterprise Law, except a one-person limited company.
The organisational and personnel structures of a commercial bank include:
Each commercial bank has a headquarter office, [and] may have branch offices, service units and representative offices in the country and overseas.
The shareholders’ meeting9 is the highest organisation of a commercial bank. There are two types of shareholders’ meetings: ordinary and extraordinary meetings.
The notification to the shareholders before the meeting, the quorum for the meeting, the agenda of the meeting, the method of voting, resolutions of the meeting, and modification and cancellation of any resolution of the meeting shall be in compliance with the Enterprise Law.
An ordinary shareholders’ meeting shall be conducted within four months after the end of each accounting year. In the event that the board of directors fails to call the meeting, the Bank of the Lao PDR shall call a shareholders’ meeting based on the request of shareholders. If there is no such request, the Bank of the Lao PDR can call a shareholders’ meeting and that shareholders’ meeting shall elect a chairperson to conduct the meeting.
The ordinary shareholders’ meeting shall have the following rights and duties:
An extraordinary shareholders’ meeting has the right and duty to consider necessary and emergency issues, such as the amendment of the charter, or the increase or reduction of capital.
The board of directors of a commercial bank shall have five to seven members, some of whom may be independent directors.
The board of directors includes the chairperson, deputy chairperson(s), and certain members who are appointed or removed by the shareholders’ meeting. The term of the office of the board of directors shall not exceed two years and [directors] may be reappointed.
The board of directors shall meet at least once every three months. The conduct of the meeting of the board of directors shall be in accordance with the charter of the commercial bank and with laws and regulations.
The board of directors has the following rights and duties:
A member of the board of directors cannot assign [any] other person to perform his duties.
A member of the board of directors of a commercial bank shall meet the following qualifications:
The committees of the board of directors include a governance committee, a risk management committee and an internal audit committee. If deemed necessary, other committees can be established based on the approval of the board of directors.
Each committee has three members of the board of directors, where one person acts as the chairperson. If there is an independent director in such committee, he shall be the chairperson of the committee. A board member may be a member of several committees, but shall be the chairperson of only one committee.
The governance committee has the following rights and duties:
To avoid or reduce risks that may occur to the commercial bank, the risk management committee has the following rights and duties:
The internal audit committee shall have the following rights and duties:
The general managing director is responsible for the day-to-day operations of the commercial bank in accordance with the rights and duties defined in the internal regulations of the commercial bank.
The general managing director is appointed or removed by the board of directors, has a term of office of two years, and may be re-appointed.
The general managing director can be a member of the board of directors, but shall not be the chairperson or a deputy chairperson of the board of directors.
The general managing director shall have the following rights and duties:
The chief financial officer is responsible for the financial [and] accounting activities of the bank, shall be appointed or removed by the board of directors, shall have a term of office of two years, and may be re-appointed.
Detailed rights and duties of the chief financial officer and managers shall be defined under specific regulations on the management of commercial banks.14
A commercial bank may establish affiliates, branches and representative offices within the country or overseas, based on the approval of the Bank of the Lao PDR.
The establishment of service units by a commercial bank is based on the commercial bank’s own consideration.
A commercial bank that wishes to establish an affiliate, branch or representative office shall meet the following conditions:
The requirements for the establishment of representative offices of foreign commercial banks shall be applied in accordance with the specific regulations of the Bank of the Lao PDR and the Law on the Promotion and Management of Foreign Investment in the Lao People’s Democratic Republic15.
The detailed requirements for the establishment of, and the filing of an application to establish affiliates, branches, and representative offices are provided in specific regulations of the Bank of the Lao PDR.
Conditions and Operational Requirements
To ensure soundness of operations, commercial banks shall implement the following prudential requirements:
Each commercial bank shall be governed by internal regulations. The main contents of such regulations shall cover its organisational structure and management systems, including the roles, rights, duties and authority of its administrators, units and employees, and also including mechanisms for monitoring and control of, and reporting by, [such persons].
Each commercial bank shall submit to the Bank of the Lao PDR a duly certified copy of its charter, and a list of the officials of the commercial bank who are currently authorised to obligate the bank, together with their specimen signatures. When amendments are made to [any of] these documents, the amended document shall be filed with the Bank of the Lao PDR within five official working days after the amendment is made.
Present and past administrators, employees, and agents of a commercial bank shall keep the information of the commercial bank confidential. Disclosure or use of such information for personal gain or gain by anyone other than the commercial bank is prohibited, unless such disclosure is for the benefit of the commercial bank itself. Confidential information may be disclosed only to the Bank of the Lao PDR, the auditors or other competent authorities as provided by the laws and regulations.
Commercial banks shall determine measures to prevent and counter money laundering in accordance with the laws and regulations.
An administrator of a commercial bank shall disclose in detail to the board of directors his activities and the activities of [any] person related to him where [he or such related person] has an interest relating to the commercial bank.
Where an administrator has a material interest in, or a material relationship relating to a matter being considered in a meeting, he shall leave such meeting.
Where an administrator fails to disclose a material conflict of interest in accordance with this article, the commercial bank, or a bank shareholder has the right to bring a case in court to cancel the contract and, at the same time, the Bank of the Lao PDR may suspend the administrator from office, and remove the administrator from office after the court delivers its decision.
Administrators and employees of commercial banks shall assume strict responsibility16 in implementing their work and shall place the customers’ interests and the commercial banks’ interests above their own.
Commercial banks shall use appropriate measures17 on administrators or employees who have caused damage to the commercial bank or its customers.
Article 39. Service Hours18
Commercial banks shall notify their service hours to their customers, and they shall not stop operations within such period[; commercial banks] shall inform their customers at least 24 hours [in advance], if they wish to stop their operations.
Banking operations include two types:
Banking business includes:
In undertaking financial business, a commercial bank may engage in the following activities:
A commercial bank must not:
Each commercial bank shall observe the following measures as provided by regulations of the Bank of the Lao PDR:21
Each commercial bank shall prepare and maintain at its head office written records containing:
Each commercial bank shall regularly notify its customers, in accordance with regulations issued by the Bank of the Lao PDR, of the terms and conditions associated with the buying and selling of foreign currencies, and with the deposits made and credit received by them, including the compound annual interest rate.
A commercial bank shall not enter into a transaction with or for the benefit of any person related to the commercial bank, such as provision of credit, buying of financial assets, procurement of goods and services, and business investments.
In the event that the related person has commenced any transaction with the commercial bank, he should be able to continue with it, but there shall not be any preferential treatment and [such transactions] must be disclosed to shareholders and to the Bank of the Lao PDR.
The holding or transfer of common shares constituting more than ten percent in a commercial bank, including a merger of banks, shall require the written authorisation of the Bank of the Lao PDR.
A commercial bank that has a strong financial position can hold an equity interest in a legal entity that is not a financial business or a bank. The shares held in the legal entity must not exceed 15% of the commercial bank’s regulatory capital and must not exceed 20% of the voting shares of that entity. However, the aggregate shareholding of the commercial bank in other businesses must not exceed 8% of its risk-weighted assets.
A commercial bank may undertake a merger, acquisition, or purchase-sale of substantial assets in accordance with a resolution of the shareholders’ meeting, and shall require the prior written authorisation of the Bank of the Lao PDR.
In the event that the purchase of shares and sale of assets is in an amount less than the amount described in the regulations of the Bank of the Lao PDR, an approval shall not be required.
Accounts, Audits and Financial Disclosure
A commercial bank shall maintain accounts and accounting data and shall prepare annual financial statements adequate to reflect its operations and financial condition in accordance with accounting standards.
Accounts and financial statements shall be in such form and detail and in accordance with such accounting standards as shall be provided by the regulations of the Bank of the Lao PDR.
The income and expenditure of a commercial bank are:
The board of directors shall approve the income-expenditure plan of the commercial bank based on the recommendation of the general managing director in accordance with the laws and regulations.
The profit of a commercial bank is the annual positive balance of the income and expenditure of the commercial bank. The net profit is the profit after deduction of tax.
The commercial bank shall allocate [part of its] net profit to the following:
The proportion to be allocated to each fund shall be decided by the shareholders’ meeting in accordance with the laws and regulations, and after that, [profit] can be distributed as dividends to the shareholders.
The loss of a commercial bank is the annual negative balance of the income and expenditure of the commercial bank. In the event that the commercial bank makes a loss, the commercial bank is allowed to use the regulatory reserve fund. If the regulatory reserve fund is insufficient, the commercial bank shall increase its financial resources in accordance with the resolution of the shareholders’ meeting.
Foreign commercial banks and foreign shareholders conducting business operations in the Lao PDR shall be entitled to transfer their dividends and profits out of the Lao PDR after they have fulfilled financial obligations and made payment to the regulatory reserve fund in accordance with the laws and regulations of the Lao PDR.
Foreign commercial banks and foreign shareholders conducting business operations in the Lao PDR shall be entitled to transfer their assets out of the Lao PDR after they have terminated their business operations and completed the liquidation of their business.
Commercial banks shall comply with the accounting system in accordance with the laws and the regulations issued by the Bank of the Lao PDR.
The accounting year of each commercial bank shall commence on 1 January and end on 31 December of each calendar year.
Each commercial bank shall establish and maintain an internal audit and control function that shall ensure that:
Each commercial bank shall be audited by an independent external auditor who shall:
Each commercial bank shall publish reports of its financial situation as follows:
Within thirty days of the end of each calendar quarter, branch offices of foreign commercial banks shall publish balance sheets and income statements on an individual basis.
Their financial statements may also be published on a consolidated basis.
Commercial banks that are authorised to provide electronic banking shall create conditions for their customers to access their accounts through computers by proprietary software or through the internet, and to permit customers to transfer funds between accounts, initiate payments and apply for credit through the computer.
Commercial banks that permit computer access must:
Internet banks may be established that provide services to customers through electronic service systems, but that have no physical offices.
Internet banks must have adequate systems to identify, monitor, and control the transaction risks from their use of technology.
Internet banks must have adequate security for their internet platforms.
Internet banks may provide operational functions themselves or contract with third-party service providers who shall be under the supervision of the Bank of the Lao PDR. Internet banks may collect fees from their customers that use the services of third parties.
Regulations on the operations of electronic banks and internet banks shall be provided in specific regulations.
Supervision and Inspection
The government centrally and uniformly administers the establishment and supervises the operations of commercial banks by assigning the Bank of the Lao PDR to be the central authority for such supervision and inspection. The supervision and inspection authority comprises:
In administering commercial banks, the Bank of the Lao PDR has the following rights and duties:
Branches of the Bank of the Lao PDR exercise rights and perform duties relating to the administration of commercial banks as assigned by the Bank of the Lao PDR, and details will be provided in specific regulations.
Inspectors from the Bank of the Lao PDR have the following rights and duties:
Each commercial bank shall comply with the regime for reporting to the Bank of the Lao PDR in order to allow the Bank of the Lao PDR to monitor its activities, as follows:
Commercial banks, affiliates, branches and representative offices of foreign commercial banks operating in the Lao PDR shall be under the supervision of the Bank of the Lao PDR or of inspectors appointed by the Bank of the Lao PDR.
If the supervision is supervision of affiliates, branches or representative offices of foreign commercial banks, the inspectors appointed by the Bank of the Lao PDR may include inspectors from a supervision authority of the foreign country where the headquarters of such commercial bank is located. The supervision authority of the country where such commercial bank is located may undertake such supervision as well.
The Bank of the Lao PDR shall supervise affiliates, branches and representatives offices of foreign commercial banks in the Lao PDR on the same basis as commercial banks organised in the Lao PDR.
Commercial banks, affiliates, branches and representative offices of foreign commercial banks that are under supervision shall fully cooperate with the inspectors from the Bank of the Lao PDR or inspectors who are appointed by the Bank of the Lao PDR23 .
It is prohibited for any person or organisation to cause difficulties, or to prevent the supervision by the Bank of the Lao PDR.
The Bank of the Lao PDR shall exercise consolidated supervision over affiliates, branches, and representative offices of Lao commercial banks located abroad.
In undertaking such supervision, the Bank of the Lao PDR may communicate and exchange information with foreign financial sector supervisors and law enforcement authorities.
Each commercial bank shall pay an annual supervision fee to the Bank of the Lao PDR in accordance with regulations.
A commercial bank has the right to bring a claim before a competent court against the Bank of the Lao PDR, or officials or representatives of the Bank of the Lao PDR if they infringe this law and cause damage to the commercial bank. The action will not stop the activities of the Bank of the Lao PDR relating to the claim, except where there is a court order to stop such activities that may cause substantial loss to the commercial bank.
Rehabilitation and Bankruptcy
If a commercial bank is facing financial difficulties or lack of liquidity that may lead to bankruptcy, the Bank of the Lao PDR may consider rehabilitating the commercial bank in question based on the proposal of its creditors, the commercial bank [itself], or inspectors from the Bank of the Lao PDR.
After it determines to rehabilitate a commercial bank, the Bank of the Lao PDR shall appoint a rehabilitation committee to take control of the commercial bank in order to rehabilitate such commercial bank within three months after the appointment of the committee. If deemed necessary, such time can be extended for another three months, but shall not exceed one year.
During the rehabilitation process, the commercial bank may undertake business operations but has to comply with the plan for rehabilitation.
The rehabilitation committee has the following rights and duties:
If, after undergoing the rehabilitation process, the concerned commercial bank cannot undertake normal banking operation, for instance where the bank cannot pay its debts completely and in a timely manner or where the value of its assets or capital is less than a quarter of the regulatory capital, then the Bank of the Lao PDR shall bring an action before the court to issue an order of bankruptcy.
After the court delivers its decision adjudicating the concerned bank as bankrupt, the Bank of the Lao PDR shall appoint a liquidation committee.
Members of the liquidation committee may come from the Bank of the Lao PDR or may be persons from concerned sectors, whether from the public or
the private sector, or who meet the requirements and qualifications prescribed by regulations of the Bank of the Lao PDR.
The liquidation committee shall have the following rights and duties25:
If the liquidation committee infringes laws and regulations in the implementation of its rights and duties as provided above, it shall be subject to removal from its position and to discipline by the Bank of the Lao PDR.
The effects of the liquidation of a bankrupt commercial bank are as follows:
The cost of the liquidation shall be borne by the bankrupt commercial bank based on its actual property, [and based] on the consideration of the liquidation committee.
The priority of payments by a bankrupt commercial bank shall be as follows:
After the completion of the liquidation of the commercial bank, the liquidation committee shall provide a report to the Bank of the Lao PDR and the concerned office of judgment enforcement.
After the Bank of the Lao PDR receives such report, the duties of the liquidation committee shall be terminated and the liquidation shall be complete.
The Bank of the Lao PDR shall terminate or withdraw the license of a commercial bank under the following conditions:
When the license of a commercial bank is terminated or removed, the Bank of the Lao PDR shall appoint a committee for its winding-up.
Policies toward Persons With Outstanding Achievement
and Measures Against Violators27
Persons or organisations that have outstanding achievements in banking operations, that have substantially contributed to the promotion of banking operations, [or]28 that have prevented the infringement of laws and regulations in the banking sector will be rewarded and receive other policies as provided by regulations.
Commercial banks, and administrators, principal shareholders and employees of commercial banks who violate this law or regulations issued by the Bank of the Lao PDR, shall be subject to the following measures:
In addition to the measures provided in Article 84 of this law, the Bank of the Lao PDR may use the following measures against a commercial bank that violates the regulations on minimum regulatory capital:
Members of the board of directors, except those who have filed a written objection against the proposed credit, shall be jointly and severally liable for losses sustained by a commercial bank from any credit extended in violation of limits on lending under Article 44 (2) and (3) of this law.
Any individual or organisation that commits an act as provided in this article of the law shall be fined from 5,000,000 Kip to 50,000,000 Kip, or shall be subject to legal proceedings depending on the severity of the case, as follows:
Any administrator or concerned person of a commercial bank who wrongly creates or records, or who falsifies or destroys, any account of the commercial bank or its customers shall be punished by imprisonment of three months to one year and shall be fined from 200,000 Kip to 2,000,000 Kip.
In the event that such person of the commercial bank who wrongly creates or records, or who falsifies or destroys, any account of the commercial bank or its customer thus causes substantial damage, [such person] shall be punished by imprisonment of one year to five years and shall be fined from 500,000 Kip to 10,000,000 Kip.
An act of any person who reports or provides incorrect information that is important for the bank to provide credit shall be regarded as a criminal offence and [such person] shall be punished by one year to five years imprisonment and shall be fined from 200,000 Kip to 5,000,000 Kip,
The government of the Lao PDR shall issue a decree to implement this law.
This law shall enter into force one hundred and twenty days from the promulgating decree issued by the President of the Lao PDR.
Commercial banks established before the promulgation of this law shall make adjustments to comply with this law within three years after this law enters into force.
Regulations or provisions that contradict this law are null and void.
Vientiane, 26 December 2006
President of the National Assembly
[Seal and Signature]
1 The term “and others” is a literal translation and is not subject to further specificity. Back
2 This phrase is intentionally broad. Back
3 In the Lao language, the same word is used for “department” and “division”. The translators have chosen “division” because it is the English term preferred by the Bank of the Lao PDR when referring to commercial banks. Back
4 The translators are aware that this definition actually describes an entity that is more closely associated with the commercial bank (such as a subsidiary) than would usually be denoted by the term “affiliate”. Back
5 The Lao word is “and” but the meaning is clearly “or”. Back
6 This is a ministry-equivalent agency under which is established the Committee for Promotion and Management of Investment (CPMI) referred to in the two investment laws, namely in Chapter 5 of the Law on Domestic Investment, and Chapter 6 of the Law on Promotion of Foreign Investment in the Lao People’s Democratic Republic. Back
7 The Lao term translated as “charter” refers to the same concept translated as “bylaws” in the Enterprise Law. Back
8 The literal translation of this term is “the person that has established”. Back
9 The term “shareholders’ meeting” is used interchangeably in two senses. First, to refer to the “meetings held by shareholders”. Second, to refer to the “body of shareholders” attending such meetings. Back
10 The term “policies” in this context takes the meaning of “privileges”. Back
11 This is a reference to the internal funds contemplated in Article 52 of this law. Back
12 The term “concerned” is used in the sense of “relevant”. Here, there is a sense that such concerned parties may include persons outside the commercial bank. Back
13 The translators were unable to definitively resolve whether this is a reference to external, imposed regulations or to the internal regulations of the commercial bank. Back
14 In practice, the chief financial officer in Lao companies may not have the elevated position suggested by the title and is usually under the accountancy department head. The placement of the chief financial officer here in the same articles as managers may signal an aspiration to strength and elevate the roles of chief financial officers in the future. Back
15 Since 2004, this law has been re-titled the Law on the Promotion of Foreign Investment in the Lao People’s Democratic Republic. Back
16 The literal translation of this term is “high responsibility”. Back
17 The term “measures” is often used as an indirect way of referring to “sanctions”. Back
18 The literal translation of this term is “time of service”. Back
19 This term is broad enough to cover debit cards and credit cards. Back
20 For readability, the structure of this sentence has been modified. Back
21 The translators are aware that not all the items in this list are phrased as “measures”. Back
22 The term “sector” is used in many Lao laws to refer to the cluster of government ministries or agencies engaged in a particular activity. Back
23 Inspectors may either be employees of the Bank of the Lao PDR or external parties appointed by the Bank of the Lao PDR, hence the two categories here. Back
24 The Lao term “bankruptcy” refers to the status of having legally been adjudicated bankrupt. There is a second Lao term “state of bankruptcy”, where the addition of the words “state of” in front of the word “bankruptcy” is intended to make a distinction between factual insolvency (in Lao: the “state of bankruptcy”) and the status of having legally been adjudicated bankrupt (in Lao: simply “bankruptcy”). In other laws, the translators have translated the second Lao term as “insolvency”. In this law, only the first Lao term is used. Back
25 The translators are aware that some of the rights listed in this article appear to connote a process of administration or management rather than outright liquidation. Back
26 The translators are aware that the exception is not required because, in any event, the preceding sentence does not, on its face, affect any security or seizure before the liquidation committee was appointed. Back
27 The term “policies” is often used as an indirect way of referring to “incentives’ or “privileges” and the term “measures” is often used as an indirect way of referring to “sanctions”. Back
28 In Lao, the word is “and”. Back
|Application to operate a commercial bank||Any person or organisation that wishes to establish a commercial bank shall submit an application to the Bank of the Lao PDR for a license||Active|
|Approval by the Bank of Lao PDR for the establishment of Affiliates, Branches, Representative Offices and Service Units||A commercial bank may establish affiliates, branches and representative offices within the country or overseas, based on receiving approval of the Bank of the Lao PDR.||Active|
|Auditing and Control Functions||Each commercial bank shall establish and maintain an internal audit and control function and be audited by an independent external auditor||Active|
|Composition of Board of Directors of Commercial Banks||The board of directors of a commercial bank shall have five to seven members||Active|
|Comppliance with accounting system||Commercial banks shall comply with the accounting system in accordance with the laws and the regulations||Active|
|Conditions for the Establishment of Affiliates, Branches and Representative Offices||A commercial bank that wishes to establish an affiliate, branch or representative office must have an effective governance structure and internal audit system; have a network system to receive or transfer data and information so as to ensure effective monitoring; and have effectively implemented prudential requirements.||Active|
|Disclosure of conflicts||An administrator of a commercial bank shall disclose conflicts of interest||Active|
|Foreign Commercial Banks to obtain approval to estbalish local branches||A foreign commercial bank that wishes to establish its branch offices or affiliates in the Lao PDR shall have the written consent of its home country supervisor.||Active|
|Form of Establishment of a Commercial Bank||A commercial bank shall be established and operated as any form of company, except a one-person limited company||Active|
|Implementation of Anti-money laundering measures||Commercial banks shall determine measures to prevent and counter money laundering||Active|
|Informinf Customers on service hours||Commercial banks shall notify their service hours to their customers||Active|
|Obligation to protect depositors||Commercial banks have a duty to protect the interests of depositors by taking measures specified in this law||Active|
|Payment of annual supervision fee||Each commercial bank shall pay an annual supervision fee to the Bank of the Lao PDR in accordance with regulations||Active|
|Payment of Fees||An applicant for a licence shall pay fees||Active|
|Period for convening of Shareholders' Meeting||An ordinary shareholders’ meeting shall be conducted within four months after the end of each accounting year, at the Board's request, or failing this by the Bank of Lao PDR||Active|
|Preparation of financial statements||A commercial bank shall prepare accounts and annual financial statements||Active|
|Prescribed investment capital||Each branch of a foreign commercial bank shall have the prescribed investment capital||Active|
|Prescribed registered capital||A commercial bank shall have the prescribed registered capital||Active|
|Prohibition on Commercial Banks from engaging in illegal conduct||Commercial Banks are prohibited from setting or requiring any person or organisation to fulfil, any illegal condition to receive the services of the commercial bank or its affiliate(s);||Active|
|Prohibition on engaging in collusive activities by commercial banks||Commercial banks are prohibited from engaging in collusive activities.||Active|