Contents
Article 1: Purpose of the Decree
Article 3: Scope of the Application of [this] Decree
PART II: Form and Substance of Financial Lease Agreements
Article 4: Form of a Financial Lease Agreement
Article 5: Right and Obligations of the Lessor
Article 6: Lessee's Rights and Obligations
Article 7: Supplier's Rights and Obligations
Article 8: Other Parties' Rights and Obligations
Article 9: Assignment and Transfer
PART III : Finance Lease Company
Article 10: Finance Lease Company
Article 11: The Establishment of a Finance Lease Company
Article 12: Finance Lease Company Belonging to a Bank
Article 13: The Relationship between a Finance Lease Company and a Bank
Article 14: Rights and Obligations of a Finance Lease Company
PART IV : Measures Against Violators
Article 15: Measures [to be Applied Against] a Lessee
Article 16: Measures [to be Applied Against a] Finance Lease Company
Lao People's Democratic Republic
Peace Independence Democracy Unity Prosperity
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Prime Minister's Office | No. 11/PM |
On
Financial Leasing
The Prime Minister issues this Decree:
General Provisions
Article 1: Purpose of the Decree
The purpose of this Decree on Financial Leasing is to develop and promote the financial leasing business to meet the financial and material needs of the multi-ethnic peoples of the Lao PDR [and] to contribute to the socio-economic development of the Lao PDR.
1. "Asset" means any type of moveable or immovable property that is the subject of a lease.
2. "Financial Lease" means a lease with an initial term of one or more years in which:
(1) the lessee specifies the asset and selects a supplier without reference to the lessor's ability or decision, and
(2) the lessor acquires an asset for the lessee by means of a financial lease contract.
Any lease may be a Financial Lease without regard to whether or not:
a. the lease payments are calculated as full payments or a substantial payment of the value of the assets; or
b. the lessee has the option to purchase the asset or to continue leasing it at a definite price or by payment of rental.
3. "Finance Lease Company" means a juristic entity that makes at least six (6) Financial Leases per year. A Finance Lease Company must be approved as provided for in this Decree.
4. "Lease" means an agreement between a lessor and a lessee in which the lessee is granted the right to possess and use an asset for any term and must pay a rental or [must meet other] conditions in the lease. A lessee has the right to sub-lease a leased Asset.
5. "Lessor" means a Financial Lease Company that has transferred the right to possess and use an Asset to a lessee.
6. "Lessee" means a person or a juristic entity that has acquired the right to possess and use an Asset from a Lessor.
7. "Supplier" means a person or juristic entity that supplies an Asset to a Lessor. Lessor may acquire an Asset by purchasing it, by leasing it, granting the right to purchase or lease it out, including by assignment from the Lessee. The Lessee may be a Supplier in a sale-leaseback-purchase contract.
8. "Supply Agreement" means an agreement by which a Lessor acquires the right topossess and use an Asset for a Lessee.
9. "Term" means the period of time specified in a Financial Lease agreement in which aLessee is allowed to possess and use the leased Asset.
Article 3: Scope of the Application of [this] Decree
This Decree applies to financial leases.
Form and Substance of Financial Lease Agreements
Article 4: Form of a Financial Lease Agreement
A Financial Lease agreement must be made in writing signed by a Lessor and a Lessee. A Financial Lease agreement must provide for the substance and conditions of the parties with respect to the leased Asset.
A Financial Lease agreement must be certified by a notary, unless the law provides otherwise.
Article 5: Right and Obligations of the Lessor
A Lessor has the following obligations:
1. To pay for the Asset, without condition or reservation, once Lessee has accepted the Asset;
2. To ensure Lessee's peaceful use and possession of the leased Asset during the lease term without interference from the Lessor or from some other cause due to Lessor's fault;
3. Shall not be liable to Lessee in respect of the Asset except when the Lessee has suffered injury as a result of Lessor's interference with the selection of the Asset or in specifying standards for the Asset;
4. Whether as Lessor or as owner of the Asset, there shall be no third party liability in respect of death, injury or damage arising from that Asset.
5. If a Lessee violates a Financial Lease agreement, in addition to the rights already provided for in the Financial Lease agreement, Lessor will retain the following rights:
5.1 Claim unpaid rental, together with interest and damages.
5.2 If a violation is serious, demand urgent [accelerated] payment of the value of future rental, discounted to present value at the rate provide for in the Financial Lease agreement; or if no rate is specified, calculation shall be at the inflation rate at the time the violation is declared, or terminate the Financial Lease agreement. A serious violation is a violation as follows:
5.3 If the Financial Lease agreement terminates before its expiration, Lessor may:
6. The creditor [sic] [Lessor] has the right to affix a label on the Asset in a conspicuous manner by which it can be clearly seen that such [Asset] belongs to the Lessor and is in the Lessee's use and possession pursuant to a Financial Lease agreement.
Lessee is prohibited from removing, obscuring, or tearing off this label.
Article 6: Lessee's Rights and Obligations
Article 7: Supplier's Rights and Obligations
Article 8: Other Parties' Rights and Obligations
Article 9: Assignment and Transfer
Finance Lease Company
Article 10: Finance Lease Company
A Finance Lease Company that has received approval to undertake business in the Lao PDR must have the status of juristic entity, [either] under the laws of the Lao PDR or a juristic entity under one's own country [of organization], and the Foreign Investment Law of the Lao PDR to be able to undertake the business of financial leasing in the Lao PDR. Individuals shall have no right to receive approval to act as a Finance Lease Company.
The name of a Finance Lease Company must consist of its own name and include the words "Finance Lease Company."
A Finance Lease Company has the right to undertake all types of tasks that relate to the financial leasing business with reference to international business undertakings as follow:
Article 11: The Establishment of a Finance Lease Company
Domestic juristic entities seeking to establish a Finance Lease Company must file an application with the Bank of the Lao PDR. Foreign juristic entities must file an application with the Foreign Investment Promotion and Management Committee in the Lao PDR and are to adhere to the Law on Foreign Investment Promotion and Management in the Lao PDR.
An application must comprise of information and various documents as provided for in regulations issued by the Bank of the Lao PDR.
The Bank of the Lao PDR shall consider such application within 60 days of the receipt of the application.
Juristic entities seeking to establish a Finance Lease Company must meet the following primary conditions:
Article 12: Finance Lease Company Belonging to a Bank
A commercial bank in the Lao PDR has the right to establish a Finance Lease Company by adhering to the procedures and rules for establishment provided for in Article 11 above.
A Finance Lease Company that has received approval to be established must be a financially independent juristic entity and be separate from the concerned bank.
Article 13: The Relationship between a Finance Lease Company and a Bank
A commercial bank, which has established a Finance Lease Company or has an equity stake in a Finance Lease Company, shall have no right whatsoever to offer any special financial rights [or] services to the Finance Lease Company that it has established or in which it has an equity stake.
[With regard to providing] banking services to a Finance Lease Company that one has established or in which one has an equity stake, [that Finance Lease Company] must be treated similarly to [other] customers in general.
Article 14: Rights and Obligations of a Finance Lease Company
A Finance Lease Company has the following rights and obligations:
Measures Against Violators
Article 15: Measures [to be Applied Against] a Lessee
Lessor has the right to employ the following measures against a Lessee who violates a Financial Lease agreement as provided for in Article 5, clause 5 of this Decree such as: fails to pay two consecutive rentals, [or] causes damage to the leased Asset:
Article 16: Measures [to be Applied Against a] Finance Lease Company
A Finance Lease Company that violates this Decree on Financial Leasing and other laws and regulations, such as: failure to report or failure to timely report to the Bank of the Lao PDR, [or] failure to pay income tax, shall have imposed upon them [certain punitive] measures according to the seriousness of the violation as follows:
Final Provisions
Individuals or juristic entities who operated a financial leasing business before the promulgation of this Decree on Financial Leasing must amend [their activities] for proper compliance with this Decree within 360 days from the day this Decree is effective.
The Bank of the Lao PDR, ministries, and other relevant sectors are assigned to implement this Decree in accordance with their respective duties.
This Decree is effective upon its signing onward.
Vientiane, 18 February 1999
Prime Minister
[signature]
[seal of Prime Minister]
Sisavath Keobounphan
Name | Description | Status |
---|---|---|
Application for establishment of Finance Leasing Companies | Domestic juristic entities seeking to establish a Finance Lease Company must apply to the Bank of the Lao PDR, and foreign entities to the Foreign Investment Promotion and Management Committee | Active |
Indepedence of a Finance Leasing Company from a Commercial Bank | A commercial bank has the right to establish a Finance Lease Company which must be a financially independent juristic entity separate from the concerned bank. | Active |
Legal status of finance lease company | A finance Lease Company that has received approval to undertake business in the Lao PDR must have the status of juristic entity, nationally or abroad | Active |
Minimum Registered Capital Requirement for the establishment of finance lease company | Juristic entities seeking to establish a Finance Lease Company must meet the minimum registered capital. | Active |
Obligations of Lessee | A Lessee must comply with the specified obligations, whiich include the right to refuse delivery of the asset and to remedy defects in the asset | Active |
Obligations of Lessor | A Lessor must comply with the specified obligations, which include paying for the asset, and ensuring the Lessee's peaceful use and possession of the leased asset. | Active |
Prohibition on offering special services to a related finance lease company by Commercial Banks | A commercial bank, which has established a Finance Lease Company or has an equity stake in a Finance Lease Company, is prohibited from offering special financial rights or services to the Finance Lease Company that it has established or in which it has an equity stake. | Active |
Requirements for the lease agreement | A Financial Lease agreement must be made in writing signed by a Lessor and a Lessee, contain terms of agreement and must be certified by a notary, unless the law provides otherwise. | Active |
Requirements that finance lease company must meet when operating. | A Finance Lease Company must meet the specified obligations, including not mobilising deposits and conform to the enterprise accounting system | Active |