LEGAL UPDATES VOL 59, JUNE 2023

LEGAL UPDATES

VOL 59, June 2023

Dear Valued Clients and Partners,

ADK Vietnam Lawyers would like to introduce to you the Legal Updates vol 58 of May 2023 with the following main contents:

1. State Bank to lower interest rates

According to the policy of the National Assembly, the direction of the Government and the Prime Minister on reducing interest rates, supporting people and businesses to increase access to capital, contributing to the recovery of production and business. On that basis, the State Bank of Vietnam (SBV) has just issued decisions to adjust interest rates in order to contribute to controlling inflation, stabilizing the macro economy, and the money market to strive to reduce interest rates lending to businesses and people, supporting economic growth recovery.

Decisions on interest rate adjustment include: Decision No. 1123/QD-NHNN; Decision No. 1124/QD-NHNN; Decision No. 1125/QD-NHNN.

Accordingly, the above decisions have the following points for adjusting interest rates:

(i) Decision 1123/QD-NHNN: Adjusting interest rates for refinancing, rediscounting, overnight lending:

- Refinancing interest rate reduced from 5.0%/year to 4.5%/year;

- Rediscount interest rate reduced from 3.5%/year to 3.0%/year;

- Interest rates for overnight loans in inter-bank electronic payments and loans to cover capital shortfalls in clearing payments by the SBV for credit institutions decreased from 5.5%/year to 5%/year.

(ii) Decision 1124/QD-NHNN: Adjustment of deposit interest rates

- The maximum interest rate applicable to demand deposits and deposits with a term of less than 1 month remains at 0.5%/year;

- The maximum interest rate applicable to deposits with a term from 1 month to less than 6 months will be reduced from 5.0%/year to 4.75%/year; Particularly, people's credit funds and microfinance institutions decreased from 5.5%/year to 5.25%/year.

(iii) Decision 1125/QD-NHNN: Adjusting short-term lending interest rates

- The maximum short-term lending interest rate in Vietnam dong of credit institutions, foreign bank branches (except for People's Credit Funds, Microfinance Institutions) will be reduced from 4.5%/year to 4.0%/year;

- The maximum short-term lending interest rate in Vietnam dong of People's Credit Funds and Microfinance Institutions decreased from 5.5%/year to 5.0%/year.

Decision 1123/QD-NHNN, Decision 1124/QD-NHNN, and Decision 1125/QD-NHNN take effect from 19/06/2023.

2. Additional conditions for registration of multi-level selling activities

On April 28, 2023, the Government has just issued Decree No. 18/2023/ND-CP amending and supplementing a number of articles of Decree No. 40/2018/ND-CP dated March 12, 2018 on operation management business by multi-level method (hereinafter referred to as “Decree 18/2023/ND-CP”)

Accordingly, Decree 18/2023/ND-CP has the following highlights:

(i) Adding additional conditions in case the organization registers for multi-level sale activities that: The enterprise has a foreign investor or a foreign-invested economic organization as the owner or member or shareholder, All foreign investors and foreign-invested economic organizations must have been operating in multi-level sales for at least 3 consecutive years in a country or territory in the world.

(ii) In addition, Decree No. 18/2023/ND-CP supplements Clauses 13, 14, Article 40 of Decree No. 40/2018/ND-CP on responsibilities of multi-level selling enterprises. Accordingly, a multi-level selling enterprise must ensure that at least 20% of its multi-level sale revenue in a fiscal year is revenue from customers who are not participants in multi-level sales of such enterprise.

Therefore, organizations that want to register for multi-level sales activities have the responsibility to meet all the conditions prescribed by the law mentioned above.

Decree No. 18/2023/ND-CP takes effect from June 20, 2023

We hope this Legal Newsletter has a lot of useful information.

Best Regards.

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