Small and medium-sized enterprises, as well as FDI companies, can take foreign loans under the provisions of Circular No. 12/2014/TT-NHNN, March 31, 2014, on taking foreign loans applied to companies not guaranteed by the government. Foreign Loans subject must be registered with the State Bank.
Read more: Foreign investment in Vietnam: What you need to know
THE KEY TERMS
- Short-term foreign loans without guarantor are foreign loans with maturities of up to 01 year and are not guaranteed by the government.
- Mid-term and long-term foreign loans are foreign loans with maturities longer than 01 year and are not guaranteed by the government.
- A foreign loan as a conventional loan means foreign borrowing through borrowing contracts, deferred payment contracts for import of goods, lending entrustment contracts, contracts for finance leasing or debt instrument issuance on the international market of the borrower.
EVERY BORROWER IS ALLOWED TO
- Implement the business plans or projects of investment funded by foreign loans of the borrower.
- Restructure the foreign debts incurred by the borrower without increasing the loan expense.
REQUIREMENTS APPLIED TO CREDITORS
- Requirements for taking short-term foreign loans: Creditors must not take short-term loans to serve mid-term and long-term purposes.
- Requirements for taking mid-term and long-term foreign loans: If the creditor has a project of investment funded by foreign capital that has a certificate of investment, the total midterm or long-term loan (including the domestic loans) taken by the creditor to serve the project must not exceed the difference between the total capital and the contributed capital in the certificate of investment.
- If the creditor takes the foreign loan to execute a business plan or project of investment that does not have a certificate of investment, the total midterm or long-term loans (including the domestic loans) taken by the creditor must not exceed the need for loans serving business plan or project of investment, which has been approved by a competent authority.
- A foreign loan agreement must be made in writing before the loan is released.
FOREIGN LOANS SUBJECT TO REGISTRATION WITH THE STATE BANK INCLUDE
- Mid-term and long-term foreign loans.
- Renewed short-term loans that have more than 01 (one) year of maturity term.
- Short-term loans which are not covered by any loan renewal contract but remain the outstanding principal owed on the anniversary of the date of first fund withdrawal in a full 01 (one) calendar year, except to the extent that borrowers have already fulfilled their debt obligations within a permitted duration of 10 (ten) days after the anniversary of the date of first fund withdrawal in a full 01 (one) year.
CASES IN WHICH REGISTRATION FOR CHANGES OF FOREIGN LOANS IS REQUIRED
- If there is any change to contents relating to loans referred to in the confirmation of foreign loan registration given by the State Bank, the borrower shall be responsible for making registration for changes of his foreign loan with the State Bank.
- If the plan for fund withdrawal, debt repayment, and actual fee remittance is changed within a permitted duration of 10 (ten) days as against the one previously approved by the State Bank, the borrower shall be responsible for notifying in writing the account service provider to carry out fund withdrawal and debt repayment according to the changed plan; By doing so, registration for changes of such loan with the State Bank shall not be required.
- The borrower shall only notify in writing the State Bank and shall not apply for registration of changes of loans in respect of the following contents
- Change of the borrower’s address in the city or province where the borrower’s head office is located.
- Change of the creditor, related information about creditors in respect of a syndicated loan that designates the representative for creditors, except when a creditor is also the representative for creditors in respect of a syndicated loan, and any change of creditors that may entail changes to the roles of the representative for creditors.
- Change of the commercial transaction name of the account service provider.
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