Circular No. 03/2023/TT-BKHCN guiding risk management in the direct lending activities of the National Science and Technology Innovation Fund

CIRCULAR

Guidelines for Managing Risks in Direct Lending Activities of the National Innovation Fund

_________________________

Pursuant to the Law on Technology Transfer dated June 19, 2017;

Pursuant to the Enterprise Law dated June 17, 2020;

Pursuant to the State Budget Law on June 25, 2015;

Pursuant to Decree No. 95/2017/NĐ-CP dated August 16, 2017 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Science and Technology;

Pursuant to Decision No. 04/2021/QĐ-TTg dated January 29, 2021 of the Prime Minister promulgating the Charter on Organization and Operation of the National Innovation Fund;

At the proposal of the Director of the National Innovation Fund and the Head of the Legal Department;

The Minister of Science and Technology issues this Circular guiding risk management in direct lending activities of the National Innovation Fund.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

Article 1. This Circular guides risk management in direct lending activities of the National Innovation Fund as prescribed in the Charter on Organization and Operation of the National Innovation Fund issued together with Decision No. 04/2021/QĐ-TTg dated January 29, 2021 of the Prime Minister (hereinafter referred to as the Fund Charter).

Article 2. This Circular applies to the National Innovation Fund (hereinafter referred to as the Fund), enterprises participating in the Fund's direct lending activities (hereinafter referred to as enterprises), and related organizations and individuals.

Article 2. Interpretation of Terms

In this Circular, the following terms are understood as follows:

1. Risk Management means applying measures prescribed in Clause 2, Article 31 of the Fund Charter.

2. Adjustment of Repayment Periods; Amount of Repayment means the Fund and the enterprise agreeing to change the repayment periods (principal, interest) or the amount of repayment (principal, interest) previously agreed upon in the contract when the loan term remains unchanged.

3. Extension of Debt means the Fund and the enterprise agreeing to extend the repayment period (principal, interest) specified in the contract.

4. Debt Forbearance means the Fund and the enterprise agreeing to temporarily not collect part or all of the debt (principal, interest) of the enterprise within a certain period according to the contract.

5. Debt Sale means the Fund transferring part or all of the right to demand payment and other related rights concerning the enterprise's debt to the buyer and receiving payment from the buyer.

6. Disposal of Collateral means the Fund implementing measures prescribed by law regarding the collateral of the enterprise to recover the debt (principal, interest) owed by the enterprise to the Fund.

7. Transfer to Off-Balance Sheet Accounting means the Fund transferring the treated debt of the enterprise out of balance sheet accounting and continuing to monitor and take measures to fully recover the debt according to the agreement signed by the enterprise with the Fund, without changing the enterprise's obligation to repay the treated debt.

8. Waiver of Interest Debt means the Fund not collecting part or all of the interest debt of the enterprise according to the contract.

9. Waiver of Principal Debt means the Fund not collecting part or all of the principal debt of the enterprise according to the contract.

10. Book Value of the Debt is the total value of the outstanding principal, interest, and other financial obligations related to the enterprise's debt (if any) recorded in the Fund's accounting books in accordance with the law.

Article 3. Principles of Risk Management

Clause 1. Risk management must be carried out strictly in accordance with the provisions of the law.

Clause 2. Consideration of risk management must be based on the causes leading to the risk, the level of risk, business production and operation conditions, financial status, ability to repay debt of the enterprise, and complete files, documents, and materials as prescribed in this Circular and the Fund Charter.

Clause 3. Risk management shall be implemented in a manner that minimizes losses for the State and holds the Fund, enterprises, and related organizations and individuals accountable for recovering the Fund's loans.

Clause 4. Selection of risk management measures shall be prioritized, with measures that do not result in loss of state capital or cause minimal loss of state capital being considered first.

Clause 5. A single debt may apply one or more risk management measures prescribed in this Circular simultaneously.

Clause 6. The Fund's risk tolerance ratio shall be implemented in accordance with Clause 6, Article 4 of the Fund Charter and below 5% at the end of the fiscal year. In cases where the Fund's risk tolerance ratio reaches 5% or higher, the Fund shall report to the Ministry of Science and Technology for handling in accordance with Point d, Clause 4, Article 31 of the Fund Charter.

Article 4. Scope of Risky Debt Processing

1. In case a business borrowing capital from the Fund has collateral assets as prescribed and encounters risks, the Fund shall have the right to proactively process the collateral assets according to agreements with the business and in accordance with the law to recover capital. The amount obtained from processing the collateral assets shall be used to cover costs for processing the collateral assets; repay the principal and interest owed to the Fund.

2. If a business borrowing capital from the Fund has insured collateral assets that suffer losses, such cases shall be handled according to the insurance contract. The compensation amount from the insurance agency shall be used to repay the principal and interest owed to the Fund.

3. In case a business borrowing capital from the Fund goes bankrupt, it shall be implemented according to the current provisions of the law.

Article 5. Sources of Risk Processing

1. Revenue recovered from selling debts and processing collateral assets.

2. Sources from risk reserves and financial reserve funds:

a) The Fund shall use risk reserves and financial reserve funds as stipulated in point a, Clause 6, Article 31 and point b, Clause 5, Article 40 of the Fund Charter to implement measures to handle risks: sell debts (in cases where the sale price is lower than the book value of the debt); process collateral assets (in cases where the amount received from processing collateral assets is lower than the book value of the debt); write off the principal;

b) In cases where risk reserves and financial reserve funds are exhausted but are insufficient to cover risks, reducing the Fund's registered capital, the Fund shall report to the Ministry of Science and Technology for submission to the Prime Minister for consideration and decision.

3. Sources to implement other risk handling measures shall be carried out in accordance with the provisions of the law.

Article 6. Cases Considered for Risk Handling

1. Businesses suffering financial and asset losses due to natural disasters as prescribed by laws on disaster prevention and control, crop failures, epidemics, fires, wars, national emergencies.

2. Businesses encountering risks when the owner of a private enterprise and the sole shareholder of a limited liability company (if the owner is an individual) lose civil capacity, die, go missing, or no longer have assets to repay debts; businesses have ceased operations and no longer have assets or financial capability to repay debts; businesses encountering risks due to objective reasons including unexpected accidents, political risks, changes in state policies directly affecting production and business activities, leading to losses, difficult financial situations, inability to repay debts (principal, interest).

3. Businesses facing financial difficulties leading to inability to repay debts without falling under the cases prescribed in Clauses 1 and 2 of this Article.

4. Businesses that have completed bankruptcy proceedings in accordance with current laws.

Article 7. Determination of Capital and Asset Losses

1. When businesses encounter risks, the Fund shall be responsible for organizing and coordinating with relevant parties including the Fund, the business, and competent authorities (if applicable) to conduct inspections and evaluations of risks and prepare records to determine the level of capital and asset losses of the business.

2. Records confirming the level of capital and asset losses of the business must be confirmed by the relevant parties specified in Clause 1 of this Article and must include basic contents such as descriptions of events occurred, risks occurred, causes of risks, levels of capital and asset losses.

3. The level of capital and asset losses of the business is the monetary value converted from actual losses of assets and capital at the time the record is prepared.

4. In necessary cases, the Fund Management Agency may hire organizations or individuals with appraisal functions to evaluate the level of capital and asset losses of the business.

Article 8. Risk Management Council

1. The Fund Management Board establishes the Risk Management Council. The Risk Management Council consists of 01 chairman who is a member of the Fund Management Board; 01 vice-chairman who is the Director of the Fund or a person authorized by the Fund Director; and 03 other members appointed by the Fund Management Board.

2. The Risk Management Council is responsible for reviewing the results of risk assessments, risk evaluation reports, capital and asset loss reports for enterprises, risk management reports, and related information; providing opinions on the measures stipulated in Articles 10, 11, 12, 13, 14, 15, and 16 of this Circular to be applied appropriately to meet the requirements for managing risks associated with debts.

3. The operating expenses of the Risk Management Council are allocated from the Fund's operational budget.

Chapter II

MEASURES FOR MANAGING RISKS

Article 9. Adjustment of Repayment Period and Amount

1. Enterprises encountering risks as specified in Clause 1 or Clause 2 of Article 6 of this Circular may be considered for adjustment of the repayment period and amount of debt.

2. An enterprise may be considered for adjustment of the repayment period and amount of debt by the Fund if it meets the following conditions:

a) Belonging to the category specified in Clause 1 of this Article;

b) Using borrowed funds for the purpose stated in the loan agreement;

c) Experiencing difficulties in business operations leading to inability to fully repay the debt (principal and interest) as stipulated in the contract;

d) Having a feasible business operation plan and debt repayment plan after the adjustment of the repayment period;

đ) Possessing all required documents as stipulated in Clause 5 of this Article.

3. The adjustment of the repayment period and amount must remain within the loan term, without changing the final repayment period and total amount of debt repayment as stipulated in the contract.

4. The Fund Director reviews and decides on the application of measures to adjust the repayment period and amount of debt.

5. The application documents for adjusting the repayment period and amount of debt prepared by the enterprise and submitted to the Fund include:

a) A risk management request letter signed by the legal representative of the enterprise, including the following contents: Reasons for the inability to repay the debt according to the contract; capital and asset losses; accounting value of the debt; risk management measures already implemented (if any) and proposed risk management measures; commitment to the feasibility of the business operation plan and debt repayment plan if the risk management measure is accepted;

b) Certified copies of audited financial statements for the two most recent years prior to the risk management request date, or certified copies of financial statements submitted to tax authorities for the year prior to the risk management request date for enterprises that have been in operation for less than two years;

c) Certified copies of the loan balance statement up to the date of the risk management measure request;

d) Other relevant documents (if any).

6. After receiving all documents as stipulated in Clause 5 of this Article, the Fund Director is responsible for organizing the assessment and evaluation of risks; determining the level of capital and asset losses incurred by the enterprise; reviewing measures to urge debt collection, previously implemented risk management measures and their outcomes (if any); the necessity of applying the proposed risk management measures; the ability of the enterprise to repay the debt (principal and interest) after the implementation of the proposed risk management measures; and deciding and implementing the adjustment of the repayment period and amount of debt.

Article 10. Extension of Debt

1. An enterprise encountering risks as stipulated in Clauses 1, 2, and 3 of Article 6 of this Circular shall be considered for debt extension.

2. An enterprise shall be considered for debt extension by the Fund if it meets the following conditions:

a) Belonging to the category specified in Clause 1 of this Article;

b) Using borrowed funds for the purpose stated in the loan agreement;

c) Having feasible production and business plans and debt repayment plans after receiving debt extension;

d) Having complete files as prescribed in Clause 5 of this Article.

3. The debt extension must be within the loan term and not exceed seven years.

4. The Chairman of the Management Council of the Fund shall examine and decide on the application of debt extension measures.

5. An enterprise shall prepare the file to request debt extension as prescribed in Clause 5 of Article 9 of this Circular.

6. After receiving complete files as prescribed in Clause 5 of this Article, the Director of the Fund shall be responsible for organizing the assessment and evaluation of risks; determining the level of capital and asset losses incurred by the enterprise; preparing a report including the implementation status of debt collection measures, risk management measures already applied and their results (if any); recommending risk management measures, the necessity of applying proposed risk management measures, the ability of the enterprise to repay principal and interest after applying proposed risk management measures; seeking the Risk Management Council's opinion on risk management measures; submitting to the competent authority as prescribed in Clause 4 of this Article for examination and decision on applying risk management measures. After the decision to apply risk management measures is made, the Director of the Fund shall organize the implementation of debt extension.

Article 11. Write-off of Debt

1. An enterprise encountering risks as stipulated in Clause 1, 2, and 3 of Article 6 of this Circular shall be considered for debt write-off.

2. An enterprise shall be considered for debt write-off by the Fund if it meets the following conditions:

a) Belonging to the category specified in Clause 1 of this Article;

b) Using borrowed funds for the purpose stated in the loan agreement;

c) Experiencing difficulties in production and business operations, leading to negative results in production and business operations of the enterprise in at least one consecutive year prior to the year requiring risk management, unable to fully and timely repay the principal and interest according to the contract;

d) Having feasible production and business plans and debt repayment plans after receiving debt write-off;

đ) Possessing all required documents as stipulated in Clause 5 of this Article.

3. The period for debt write-off shall not exceed three years and shall not be counted towards the borrowing period. During the debt write-off period, the enterprise shall not bear accrued interest, nor shall it have to repay the principal and interest.

4. The Minister of Science and Technology shall examine and decide on the application of debt write-off measures as prescribed in Points a, b, c, and e of Clause 1, Point b of Clause 4 of Article 31 of the Fund Charter.

5. An enterprise shall prepare the file to request debt write-off as prescribed in Clause 5 of Article 9 of this Circular.

6. After receiving complete files as prescribed in Clause 5 of this Article, the Director of the Fund shall be responsible for organizing the assessment and evaluation of risks; determining the level of capital and asset losses incurred by the enterprise; preparing a report including the implementation status of debt collection measures, risk management measures already applied and their results (if any); recommending risk management measures, the necessity of applying proposed risk management measures, the ability of the enterprise to repay principal and interest after applying proposed risk management measures; seeking the Risk Management Council's opinion on risk management measures; submitting to the competent authority as prescribed in Clause 4 of this Article for examination and decision on applying risk management measures. After the decision to apply risk management measures is made, the Director of the Fund shall organize the implementation of debt write-off.

Article 12. Sale of Debts

1. Enterprises encountering risks as specified in Clauses 1, 2, and 3 of Article 6 of this Circular shall be considered for debt sale.

2. Enterprises may be considered for debt sale by the Fund or the Fund may propose debt sale when meeting the following conditions:

a) Belonging to the category specified in Clause 1 of this Article;

b) Using borrowed funds for the purpose stated in the loan agreement;

c) Experiencing difficulties in production and business operations, leading to negative results in production and business operations of the enterprise in at least one consecutive year prior to the year requiring risk management, unable to fully and timely repay the principal and interest according to the contract;

d) Having complete files as prescribed in Clause 5 of this Article.

3. The sale of debts between the Fund and the buyer of debts shall be carried out in accordance with the regulations of the State Bank on the activities of buying and selling debts by credit organizations and foreign bank branches, and other relevant laws.

A debt may be sold partially or entirely at the book value of the debt, and priority shall be given to debt sale through auction methods applied first. In cases where the auction is not successful, the Fund may consider applying the negotiated sale method.

4. Authority to decide on the application of debt sale measures:

a) The Management Board of the Fund shall examine and decide on the application of debt sale measures as stipulated in Point c Clause 4 Article 31 of the Charter of the Fund and the regulations of the State Bank on the activities of buying and selling debts when the application of debt sale measures does not reduce the charter capital of the Fund;

b) In cases where the application of debt sale measures reduces the charter capital of the Fund, the Director of the Fund shall submit to the Minister of Science and Technology for examination and to the Prime Minister for decision according to the provisions of Points a, b, c, e Clause 1 and Point a Clause 4 Article 31 of the Charter of the Fund.

5. Enterprises or the Fund may propose debt sale:

a) In cases where enterprises propose debt sale, enterprises prepare documents in accordance with Clause 5 Article 9 of this Circular. If enterprises propose risk management for the entire book value of the debt, the proposal for debt sale does not need to include commitments regarding the feasibility of business operation plans and loan repayment plans if accepted for risk management;

b) In cases where the Fund proposes debt sale, the Fund prepares documents including:

- A document proposing risk management by the Fund containing basic contents: The business situation of the enterprise, debt repayment situation (principal, interest) according to the contract, risks occurred, causes leading to risks, losses in capital and assets suffered by the enterprise, the book value of the debt. The document proposing risk management must clearly state the implementation of debt collection measures, risk management measures already applied and their results (if any), and propose necessary risk management measures;

- A confirmation record of losses in capital and assets of the enterprise (without the enterprise's confirmation);

- Recommendations for risk management for a part or the entire book value of the debt;

- The original document proposing or approving the purchase of debt by the buyer of debt (if any);

- Other documents and materials as prescribed by law and as requested by the buyer of debt (if any).

6. Methods of Debt Sale

a) Auction Method

- The Fund hires an auction organization established and operating under the law or organizes the auction of the debt according to the law on auctioning assets;

- Determination of the starting price of the debt under the auction method shall be carried out in accordance with the regulations of the State Bank of Vietnam on appraising the debt in the activities of buying and selling debts by credit organizations.

b) Negotiated Method

- The Fund and the buyer of debt directly negotiate the purchase and sale of debt or through intermediaries according to market principles;

- Determination of the price of the debt according to market principles shall refer to the starting price of the debt as provided for in Point a of this clause.

7. Purchase and Sale Contract of Debts

The sale of debts by the Fund shall be carried out through a Purchase and Sale Contract of Debts, which clearly specifies the sale price of the debt, the transfer of creditor rights from the Fund to the buyer of debt, and other related agreements.

8. Handling the Difference Between the Sale Price of the Debt and the Book Value of the Debt (after deducting costs as prescribed by law)

a) In cases where the sale price of the debt is higher than the book value of the debt: The excess difference shall be handled according to the provisions of Paragraph 3 Point b Clause 5 Article 40 of the Charter of the Fund;

b) In cases where the sale price of the debt is lower than the book value of the debt: The shortfall difference shall be handled according to the provisions of Point a Clause 6 Article 31 of the Charter of the Fund.

9. Accounting Treatment in Debt Sale

The Fund shall carry out accounting treatment for debt sale according to current regulations on accounting systems applicable to the Fund.

10. Organization of Risk Management Implementation:

a) In cases where enterprises propose risk management, after receiving complete documents as stipulated in Point a Clause 5 of this Article, the Director of the Fund shall be responsible for organizing the assessment and evaluation of risks; examining the losses in capital and assets suffered by the enterprise; preparing a risk management report; seeking the Council's opinion on risk management measures, submitting to the competent authority as stipulated in Clause 4 of this Article for examination and decision on the application of risk management measures. After the decision on the application of risk management measures, the Director of the Fund shall organize the implementation of debt sale;

b) In cases where the Fund proposes risk management, after preparing complete documents as stipulated in Point b Clause 5 of this Article, the Director of the Fund shall be responsible for organizing the assessment and evaluation of risks; examining the losses in capital and assets suffered by the enterprise; preparing a risk management report; seeking the Council's opinion on risk management measures, submitting to the competent authority as stipulated in Clause 4 of this Article for examination and decision on the application of risk management measures. After the decision on the application of risk management measures, the Director of the Fund shall organize the implementation of debt sale.

Article 13. Handling of collateral assets

1. An enterprise encountering risks as specified in Clauses 1, 2, and 3 of Article 6 of this Circular shall be considered for handling of collateral assets.

2. An enterprise shall be considered for handling of collateral assets by the Fund or the Fund may propose to handle collateral assets when it meets all the following conditions:

a) Belonging to the category specified in Clause 1 of this Article;

b) Using borrowed funds for the purpose stated in the loan agreement;

c) Experiencing difficulties in production and business operations, leading to negative results in production and business operations of the enterprise in at least one consecutive year prior to the year requiring risk management, unable to fully and timely repay the principal and interest according to the contract;

d) Having complete files as prescribed in Clause 5 of this Article.

3. The handling of collateral assets shall be carried out in accordance with the provisions of the Civil Code and other relevant laws on the handling of collateral assets; the party receiving the guarantee and the party providing the guarantee, as well as the method of handling collateral assets, must be stipulated in the Collateral Asset Contract.

4. Authority to decide on applying measures to handle collateral assets:

a) The Chairman of the Management Board of the Fund shall examine and decide on applying measures to handle collateral assets without reducing the registered capital of the Fund in accordance with Point c Clause 4 Article 31 of the Charter of the Fund, the provisions of the Civil Code, and other relevant laws on the handling of collateral assets;

b) In cases where applying measures to handle collateral assets results in a reduction of the registered capital of the Fund, the Director of the Fund shall submit to the Minister of Science and Technology for examination and submission to the Prime Minister for examination and decision in accordance with Points a, b, c, and e Clause 1, Point a Clause 4 Article 31 of the Charter of the Fund, the provisions of the Civil Code, and other relevant laws on the handling of collateral assets.

5. The enterprise or the Fund prepares the application dossier for handling collateral assets:

a) In cases where the enterprise proposes to handle collateral assets:

The enterprise shall prepare the dossier in accordance with Clause 5 of Article 9 of this Circular.

In cases where the enterprise proposes to handle collateral assets for the full recorded value of the debt in the accounting books, the application for handling collateral assets does not need to include a commitment regarding the feasibility of the business operation plan and the debt repayment plan if the risk handling is accepted;

b) In cases where the Fund proposes to handle collateral assets, the Fund shall prepare the dossier including:

- A document proposing risk management by the Fund containing basic contents: The business situation of the enterprise, debt repayment situation (principal, interest) according to the contract, risks occurred, causes leading to risks, losses in capital and assets suffered by the enterprise, the book value of the debt. The document proposing risk management must clearly state the implementation of debt collection measures, risk management measures already applied and their results (if any), and propose necessary risk management measures;

- A confirmation record of losses in capital and assets of the enterprise (without the enterprise's confirmation);

- Recommendations for risk management for a part or the entire book value of the debt;

- Other documents and materials as prescribed by law on the handling of collateral assets (if applicable).

6. Methods of handling collateral assets

a) Auctioning the asset;

b) The party receiving the guarantee selling the asset itself;

c) The party receiving the guarantee accepting the asset itself in lieu of the fulfillment of the obligation by the party providing the guarantee;

d) Other methods as prescribed by law on the handling of collateral assets.

7. Handling the difference between the amount received from the sale of collateral assets and the recorded value of the debt after deducting the costs as prescribed by law:

a) In cases where the amount received from the sale of collateral assets exceeds the recorded value of the debt, the excess amount shall be handled according to the agreement in the contract (if any) or transferred back to the enterprise;

b) In cases where the amount received from the sale of collateral assets is less than the recorded value of the debt, the shortfall shall be handled in accordance with Point a Clause 6 Article 31 of the Charter of the Fund;

The Fund has the right to request the enterprise to pay the remaining shortfall of the debt. The proceeds from the remaining shortfall shall be handled in accordance with Clause 3 Point b Clause 5 Article 40 of the Charter of the Fund.

8. Organization to implement risk handling:

a) In cases where the enterprise proposes to handle risks, after receiving the complete dossier as specified in Point a Clause 5 of this Article, the Director of the Fund shall be responsible for organizing the assessment and evaluation of risks; examining the level of damage to capital and assets suffered by the enterprise; preparing a report on risk handling; seeking the opinion of the Risk Handling Council on the risk handling measures, submitting to the competent authority as specified in Clause 4 of this Article for examination and decision on applying risk handling measures. After the decision on applying risk handling measures is made, the Director of the Fund shall organize the implementation of handling collateral assets;

b) In cases where the Fund proposes to handle risks, after preparing the complete dossier as specified in Point b Clause 5 of this Article, the Director of the Fund shall be responsible for organizing the assessment and evaluation of risks; examining the level of damage to capital and assets suffered by the enterprise; preparing a report on risk handling; seeking the opinion of the Risk Handling Council on the risk handling measures, submitting to the competent authority as specified in Clause 4 of this Article for examination and decision on applying risk handling measures. After the decision on applying risk handling measures is made, the Director of the Fund shall organize the implementation of handling collateral assets.

Article 14. Transfer to Off-Balance-Sheet Monitoring

1. The Fund may consider transferring monitoring to off-balance-sheet for debts that have applied asset protection measures as stipulated in Article 13 of this Circular and at least one risk management measure as stipulated in Articles 9, 10, 11, 12, 15, and 16 of this Circular but have not recovered the full loan amount (the book value of the debt).

2. The transfer to off-balance-sheet monitoring must ensure:

a) The Fund transfers the entire outstanding loan balance (the book value of the debt) to the non-performing loan account, loss account, and uses the risk reserve to manage credit risks for the principal debt;

b) During the period of off-balance-sheet monitoring, the Fund continues to calculate interest on the remaining outstanding balance according to the contract after applying risk management measures as stipulated in Articles 11, 12, 13, 15, and 16 of this Circular;

c) After transferring monitoring to off-balance-sheet for the debt, the Fund continues to monitor and take recovery measures. Related organizations and individuals shall not inform the borrowing enterprise about the transfer to off-balance-sheet monitoring under any form;

3. The proceeds from recovering debts transferred to off-balance-sheet monitoring shall be handled in accordance with the accounting laws;

4. Write-off of debts transferred to off-balance-sheet monitoring:

a) For debts of enterprises facing risks due to one of the reasons specified in Clause 2 and Clause 4 of Article 6 of this Circular: after the bankruptcy process ends or the local authority or court with jurisdiction issues a decision (document) regarding the loss of civil capacity of the individual owner of a private enterprise and the sole shareholder of a limited liability company (if the owner is an individual), death, disappearance, and other documents proving that the enterprise is unable to repay the debt (the book value of the debt);

b) For remaining debts with a minimum off-balance-sheet monitoring period of five years and after implementing all debt recovery measures without success (the book value of the debt);

Article 15. Debt Interest Write-off

1. Enterprises facing risks as stipulated in Clause 1, Clause 2, or Clause 4 of Article 6 of this Circular may be considered for debt interest write-off;

2. An enterprise may be considered for debt interest write-off by the Fund or the Fund may propose debt interest write-off if it meets the following conditions:

a) Belonging to the category specified in Clause 1 of this Article;

b) Using borrowed funds for the purpose stated in the loan agreement;

c) Experiencing difficulties in business operations leading to losses in two consecutive years prior to the year when risk management measures are implemented; or having cumulative losses in one year before the year when risk management measures are implemented (for enterprises operating less than two years); unable to fully and timely repay the debt according to the contract (except in cases stipulated in Clause 4 of Article 6 of this Circular);

d) Having feasible production and business plans and remaining debt repayment plans after being granted debt interest write-off (except for enterprises declared bankrupt);

đ) Having complete documentation for risk management measures as stipulated in Clause 5 of this Article;

e) In cases stipulated in Clause 1 and Clause 2 of Article 6 of this Circular: The enterprise's debt has been subject to risk management measures as stipulated in Articles 12 and 13 of this Circular to recover the debt, but there remains unpaid interest;

g) In cases stipulated in Clause 4 of Article 6 of this Circular: The enterprise's debt, whether or not it has been subject to risk management measures as stipulated in Articles 12 and 13 of this Circular to recover interest, still has unpaid interest;

3. A debt interest can only be written off once;

4. The Director of the Fund is responsible for submitting to the Minister of Science and Technology for consideration and decision on the application of debt interest write-off measures and the level of write-off as stipulated in Point b, Clause 4, Article 31 of the Fund Charter;

5. Enterprises or the Fund may propose debt interest write-off;

a) Enterprises proposing debt interest write-off when facing risks as stipulated in Clause 1 and Clause 2 of Article 6 of this Circular, prepare documents as stipulated in Clause 5 of Article 9 of this Circular;

b) The Fund proposes debt interest write-off for enterprises facing risks as stipulated in Clause 4 of Article 6 of this Circular. The Fund prepares the debt interest write-off proposal as follows:

- A document proposing risk management by the Fund containing basic contents: The business situation of the enterprise, debt repayment situation (principal, interest) according to the contract, risks occurred, causes leading to risks, losses in capital and assets suffered by the enterprise, the book value of the debt. The document proposing risk management must clearly state the implementation of debt collection measures, risk management measures already applied and their results (if any), and propose necessary risk management measures;

- A confirmation record of losses in capital and assets of the enterprise (without the enterprise's confirmation);

- Recommendations for risk management for a part or the entire book value of the debt;

- Decision of the Enforcement Agency regarding the execution of the bankruptcy declaration (original);

- Other documents and materials as prescribed by law (if any);

6. Implementation of debt interest write-off:

a) In cases where enterprises propose debt interest write-off: After receiving complete documents as stipulated in Point a, Clause 5 of this Article, the Director of the Fund is responsible for organizing the assessment and evaluation of risks; examining the damage to capital and assets of the enterprise; preparing a risk management report; seeking the Council's opinion on risk management measures, submitting to the competent authority as stipulated in Clause 4 of this Article for consideration and decision on the application of risk management measures. After the decision on the application of risk management measures, the Director of the Fund organizes the implementation of debt interest write-off;

b) In cases where the Fund proposes debt interest write-off: After preparing complete documents as stipulated in Point b, Clause 5 of this Article, the Director of the Fund is responsible for organizing the assessment and evaluation of risks; examining the damage to capital and assets of the enterprise; preparing a risk management report; seeking the Council's opinion on risk management measures, submitting to the competent authority as stipulated in Clause 4 of this Article for consideration and decision on the application of risk management measures. After the decision on the application of risk management measures, the Director of the Fund organizes the implementation of debt interest write-off.

Article 16. Debt Principal Write-off

1. Enterprises encountering risks as stipulated in Clause 4, Article 6 of this Circular shall be considered for debt principal write-off.

2. The Fund proposes to write off the debt principal of enterprises when meeting the following conditions:

a) Belonging to the category specified in Clause 1 of this Article;

b) Using borrowed funds for the purpose stated in the loan agreement;

c) The enterprise's debt has been or has not yet been subject to risk management measures prescribed in Articles 12 and 13 of this Circular to recover the debt principal, but the enterprise still has remaining unpaid debt principal.

d) Having complete files as prescribed in Clause 5 of this Article.

3. A debt principal can only be written off once.

4. The Minister of Science and Technology shall examine and decide on applying the debt principal write-off measure and the amount of write-off in cases where the debt principal write-off does not reduce the Fund's registered capital as provided in Point b, Clause 4, Article 31 of the Fund Charter. In cases where the debt principal write-off reduces the Fund's registered capital, the Fund Director shall submit for examination and decision by the Minister of Science and Technology and the Prime Minister according to the provisions at Points a, b, c, and e, Clause 1, Point a, Clause 4, Article 31 of the Fund Charter.

5. The Fund prepares the application dossier for debt principal write-off including:

- A document proposing risk management by the Fund containing basic contents: The business situation of the enterprise, debt repayment situation (principal, interest) according to the contract, risks occurred, causes leading to risks, losses in capital and assets suffered by the enterprise, the book value of the debt. The document proposing risk management must clearly state the implementation of debt collection measures, risk management measures already applied and their results (if any), and propose necessary risk management measures;

- A confirmation record of losses in capital and assets of the enterprise (without the enterprise's confirmation);

- Recommendations for risk management for a part or the entire book value of the debt;

- The Enforcement Agency's decision on enforcing the bankruptcy declaration decision.

- Other documents and materials as prescribed by law (if any);

6. The Fund Director is responsible for organizing the assessment and evaluation of risks; examining the capital and asset losses incurred by the enterprise; preparing a risk management report; seeking the Risk Management Council's opinion on risk management measures; submitting to the competent authority as prescribed in Clause 4 of this Article for examination and decision on applying risk management measures. After the decision on applying risk management measures is made, the Fund Director organizes the implementation of the debt principal write-off.

Chapter III

ORGANIZATION AND IMPLEMENTATION

Article 17. Responsibilities of the Fund

1. Implement risk management according to the authority prescribed in the Fund Charter and this Circular.

2. Develop and promulgate regulations on the organization and operation of the Risk Management Council.

3. Develop and promulgate regulations on loan classification and risk reserve provisioning as prescribed in Article 30 of the Fund Charter.

4. Develop and promulgate the Risk Management Process.

Article 18. Responsibilities of Enterprises

1. Provide complete, timely, and accurate information about financial status, production and business operations, conditions for risk management as prescribed in this Circular and required documents, papers, and materials; comply with commitments in signed contracts and other related contents when requesting risk management as prescribed in this Circular, relevant legal regulations, and guidance documents from the Fund.

2. Bear legal responsibility for the accuracy, legality, and validity of information and data in the dossiers, papers, and materials submitted for risk management to the Fund and contents that enterprises, organizations, or individuals have committed to if risk management measures are applied.

3. Repay the full debt to the Fund after risk management (except in cases of total debt principal and interest write-off or debt sale) as prescribed in this Circular.

Article 19. Implementation Provisions

1. This Circular takes effect from July 1, 2023.

2. During implementation, if there are difficulties, agencies, organizations, and individuals are requested to report to the Ministry of Science and Technology for research, amendment, and supplementation./.