Procedures for registration of foreign loans borrowed by enterprises in Vietnam

Procedures for registration of foreign loans borrowed by enterprises in Vietnam

On 15 Sept 2014, State Bank of Vietnam has issued aforesaid Circular pescrribes the procedures for registration of foreign loans borrowed by enterprises in Vietnam which will go in force from 1st November 2014 with summary as follows:

1. Foreign loans to be registered includes:

 1.1. Medium and long term foreign loans;
 1.2. Short term foreign loans which have been rescheduled, if the total loan term loan is above one year;
 1.3. Short term foreign loan without rescheduled agreement but which still have a loan balance at the first anniversary of the initial capital drawdown, except where the Borrower completes repayment of the loan within 10 days after such anniversary.

2. Entities required to register foreign loans including changes: Borrowers shall conduct foreign loan registration, including registration of changes as follows:

 2.1. A borrower enters a foreign loan agreement with a lenders being non-residents;
 2.2. A Credit institutions, foreign bank branches provides a loan as authorized by a non-resident principal;
 2.3. A party has obligation to repay a debt according to a debt instruments issued to non-resident; \
 2.4. A finance lessee under a finance lease agreement with a non-resident;
 2.5. An importer of goods on deferred payment.

3. Procedures for registration of foreign loans borrowed by enterprises in Vietnam

 A borrower shall prepare a application file for foreign loan registration and lodge it personally with or send it by post to the Registration Agency within 30 days after the following dates:
 a) The date of signing of medium and long term foreign loans agreement;
 b) The date of signing rescheduled agreement of short term loan make it a medium or long term foreign loan;
 c) The date being one full year after date of the initial drawdown.
  State Bank of Vietnam shall provide written certification of registration within 20 days from  the date of receipt of a complete and valid application file from the Borrower or 60 days for foreign loan in VND.

4. Application files for registration of foreign loan in standard form and attached documents in accordance with Article 8 & 9 of this Circular.

5. Registration of changes in foreign loans:

 5.1. Except for the case prescribed in clause 5.2 below, if there is any change in items relevant to the foreign loan as compared to the items in the State Bank”s certification of registration [previously], then the Borrower must register such change with the State Bank in accordance with the provisions of this Circular.
 5.2. If there is a plan on loan drawdown, on loan repayment or on remittance of expenses which actually changes within 10 days as compared to the plan which the State Bank previously certified, then the Borrower must notify the commercial bank or foreign bank branch where it opened its loan capital account or account for foreign debt repayment to implement the loan drawdown or loan repayment in accordance with the changed plan; but it is not necessary to register a change in the foreign loan with the State Bank 

6. Procedures for registration of changes in foreign loans borrowed by enterprises in Vietnam

 6.1. Within 30 days after the date of signing the agreement on the change and prior to the effective date of the changed or amended item, the Borrower must forward a file requesting registration of the change in the foreign loan agreement by post or by personally lodging it with the agency certifying registration of loans or with the agency which certified registration of the most recent change to the loan, in order for such agency to register the change.

 6.2. Within 20 days after the date on which the authorized agency receives a complete and valid application file from the Borrower, the State Bank shall provide written certification of registration of the change in the foreign loan.

7. Application files for registration of changes in foreign loan by enterprise standard form and attached documents in accordance with Article 12 of this Circular.

8. Authority to certify registration of foreign loan including registration of change:

8.1. The State Bank (Foreign Exchange Management Department) shall certify registration of foreign loans including changes in foreign loans with a loan turnover [amount] above $10 million USD (or the equivalent value in another foreign currency) and in the case of all foreign loans denominated in VND.

8.2. The provincial State Bank branch where a Borrower has its headquarters shall certify registration of foreign loans including changes in foreign loans with a loan turnover up to $10 million USD (or the equivalent value in another foreign currency).

9. Validity of written certification of registration:

 A written certification of registration of foreign loan, including registration of changes in foreign loan shall be invalid in following cases:

 1.1. On expiry of 6 months after the last date for the drawdown period  registered by the State Bank, the Borrower fails to actually drawdown capital and fails to register a change in the plan for such foreign loan capital drawdown
 1.2. If foreign loan has not made drawdown, but SBV provide to the Borrower written notification of the revocation of the certificate of registration, including registration of change in foreign loan.

In summary, there are three new key points of regulatory changes to be noted from this Circular on procedures for registration of foreign loans borrowed by enterprises in Vietnam:

 1. A short term loan being passed one year from drawdown date without rescheduled agreement must be registered with SBV within 30 days. If customer fails to monitor these loans, it is easily to violate this rule.  
 2. Borrower is permitted to make drawdown, repayment, fee payment within time limit of 10 days other than the schedule registered with SBV without registration of amendment of such foreign loan.
 3. A written certification of registration of foreign loan, including registration of change in foreign loan shall be invalid if on expiry of 6 months after the last date for the drawdown period registered by the State Bank, but borrower fails to make drawdown and does not make registration of change in foreign loans.

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Related text:
-Procedure for registration of foreign loan in Vietnam, Click here