On 7 June 2019, the revised Law on Commercial Banks No. 56/NA dated 7 December 2018 ("Updated Law") was published on the Laos' official electronic gazette. The Updated Law came into effect 15 days after its publication in the gazette. Banks that are already established in Laos are given two years to implement the new rules contained in the Updated Law, except the requirements on increased minimum registered capital, for which they are given five years to implement.
The key features of the Updated Law include:
- Registered capital – The minimum registered capital for commercial banks has been raised from LAK 100 billion (approx. US$11.5 million) to LAK 500 billion (approx. US$58 million), while the minimum registered capital for Lao branches of foreign commercial banks has been raised from LAK 50 billion (approx. US$5.8 million) to LAK 300 billion (approx. US$34.5 million).
- Appointment and dismissal of executives – The consent of the Bank of the Lao PDR ("BOL") must be obtained before an executive is appointed or dismissed. An "executive" of a commercial bank is defined as a member of the board of directors or its component committees, a member of the directors' council, a department head or a branch head.
- Governance – The Updated Law also clarifies a number of rules relating to governance structures of a bank, including those that relate to the board of directors, its component committees and the director's committee.
- Preventive and remedial measures – In addition to meeting the requirements for maintaining adequate capital which may vary depending on the BOL's determination, there is a new obligation for commercial banks that are deemed important to the stability of the Lao banking system. This obligation requires commercial banks to devise plans for handling financial, economic or other relevant crises. The plans must be in accordance with the BOL policy and must be updated annually.
On 5 June 2019, the Department of Import and Export of the Ministry of Industry and Commerce ("MIC") issued Decision on Trading Rights of Foreign Traders No. 0623/MOIC ("Decision"). This was published in the official electronic gazette on 12 June 2019 and took effect 15 days after its publication.
The Decision applies to foreign traders that are issued with a Trading Rights Certificate ("Certificate") by the Department of Import and Export of MIC, which allows the holders of such certificates to import or export goods. Foreign traders which are not registered in the country need to apply for a Certificate to be able to import and export goods.
The Certificate requirement has been imposed in addition to existing pre-requisites for importing or exporting goods.
Eligibility to apply for a Certificate
To be eligible to apply for a Certificate, foreign traders must: (i) operate in accordance with the laws of their country of origin; (ii) not have committed an offense, or be involved in criminal proceedings related to trading or financial matters; and (iii) be from a contracting member country of the World Trade Organization.
Documents to submit
An applicant for the Certificate must submit several supporting documents, including a copy of the passport or incorporation certificate from the country of the foreign trader, a document certifying the overseas address of the foreign trader, and criminal record (if any) or a certification that the foreign trader does not have any criminal record.
Once issued, the Certificate is valid for three years and can be renewed.
