Circular No. 12/2014/TT-NHNN on conditions for foreign borrowing by enterprises not guaranteed by the Government

CIRCULAR

Article 24provisions on the conditions for foreign borrowing by enterprises

shall not Cbe guaranteed by the Government

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Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH15 dated July 28, 2021 of the 15th National Assembly on approving the investment plan for the National Target Program on New Rural Development for the period 2021-2025;1on June 16, 202010;

Based on the Law on Credit InstitutionsNo. 47/2010/QH1June 16, 2010; 2010;

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Reciprocal needsoenergy I

GENERAL PROVISIONS

Article 1. Scope of regulation and subjectsnationalThe amount of fees collected for food safety and hygiene work shall be implemented according to the schedule of fees attached to this Circular.

1. This Circular stipulates the conditions for foreign borrowing by Resident Entities which are enterprises, cooperatives, cooperative unions, credit organizations (excluding state-owned commercial banks), and foreign bank branches established and operating in Vietnam that are not guaranteed by the Government (hereinafter referred to collectively as the Borrower), except as provided in Clause 2 and Clause 3 of this Article.

2. Conditions for issuing international bonds by enterprises that are not guaranteed by the Government shall be implemented in accordance with the Government's regulations on issuing corporate bonds.

3. Conditions for foreign borrowing by state-owned commercial banks shall be implemented in accordance with separate regulations of the State Bank of Vietnam (hereinafter referred to as the State Bank).

Article 2. Interpretation of Terms

In this Circular, the following terms shall be understood as follows:

1. Short-term foreign borrowing (hereinafter referred to as short-term foreign borrowing) is foreign borrowing not guaranteed by the Government with a term of up to one (01) year.

2. Medium- and long-term foreign borrowing (hereinafter referred to as medium- and long-term foreign borrowing) is foreign borrowing not guaranteed by the Government with a term exceeding one (01) year.

3. Production and business plan using borrowed foreign capital is a production and business plan demonstrating the legal and reasonable purpose and need for foreign borrowing and the Borrower's ability to repay the debt.

4. Investment project is a set of proposals to invest medium- and long-term capital to carry out investment activities in a specific area within a defined period.

5. Foreign borrowing costs are the total amount of costs converted into an annual percentage rate of the loan amount, including foreign borrowing interest rates and other related costs that the Borrower must pay to the lender, guarantors, insurers, agents, and other related parties.

Article 3. Principles for applying conditions for foreign borrowingớ1. The Borrower and foreign loans must meet general conditions and additional conditions corresponding to each specific foreign loan.

2. The Borrower is responsible for complying with the provisions of this Circular and other relevant laws when concluding and implementing foreign loans.

3. The State Bank supervises compliance with foreign borrowing conditions by the Borrower through registration confirmation of foreign loans. For loans that do not require registration with the State Bank, the Borrower bears full responsibility under the law for compliance with the conditions stipulated in this Circular.

Article 4. Inspection and examination of compliance with foreign borrowing conditions

Articleon1. The State Bank shall conduct inspections and examinations of compliance with foreign borrowing conditions stipulated in this Circular by the Borrower in accordance with the law.developmentinspect compliance with provisions on conditions for foreign borrowing

The State Bank shall conduct inspections and examinations of compliance with foreign borrowing conditions stipulated in this Circular by the Borrower in accordance with the law.

Chapter II

GENERAL PROVISIONS

Article 5. Coordination relationships in implementing social work tasks in hospitals|||Purpose of foreign borrowing

The Borrower is permitted to borrow from abroad for the following purposes:

1. To implement production and business plans, investment projects using foreign borrowed capital of the following entities:

a) Of the Borrower;

b) Of enterprises in which the Borrower participates in direct investment (applicable only to medium and long-term foreign borrowing). In this case, the maximum limit of borrowing by the Borrower on the total amount of borrowing serving the production and business plan, investment project shall not exceed the proportion of the Borrower's capital contribution in the enterprise in which the Borrower participates in capital contribution.

The production and business plans, investment projects using foreign borrowed capital stipulated in this Clause must be approved by the competent authority in accordance with relevant Vietnamese laws and consistent with the scope of the establishment permit, business registration certificate, investment registration certificate, cooperative registration certificate, or inter-cooperative registration certificate of the Borrower or of the enterprise in which the Borrower participates in direct investment.

2. To restructure the Borrower's foreign debts without increasing borrowing costs.

Article 6. Foreign Loan Agreement

1. The foreign loan agreement must be concluded in writing before disbursing the loan and must not contravene the provisions of Vietnamese law except as provided in Clause 2 of this Article.

2. In the case of short-term foreign borrowing by credit institutions, branches of foreign banks, the foreign loan agreement must be concluded in writing before or at the time of disbursing the loan and must not contravene the provisions of Vietnamese law.

Article 7. Currency of Foreign Borrowing

1. The currency of foreign loans is foreign currency.

2. Foreign borrowing in Vietnamese Dong may only be carried out in the following cases:

a) The borrower is a microfinance organization;

b) The Borrower is a foreign-invested enterprise borrowing from profits distributed in Vietnamese Dong from the direct investment activities of the Lender, a foreign investor who has contributed capital to the Borrower;

c) Other cases when approved by the Governor of the State Bank of Vietnam based on actual circumstances and the necessity of each case.

Article 8. Security Transactions for Foreign Loansớ1. The Borrower and foreign loans must meet general conditions and additional conditions corresponding to each specific foreign loan.

1. Security transactions for foreign loans must not contravene current relevant provisions of Vietnamese law.

2. The use of shares, stocks, or equity contributions of Vietnamese enterprises or convertible bonds issued by Vietnamese enterprises as collateral for non-resident lenders or related parties must comply with securities regulations, foreign investor holding ratios in Vietnamese enterprises, and/or other relevant legal provisions.

Article 9. Costs of Foreign Borrowing

1. The costs of foreign borrowing are agreed upon by the Borrower, the Lender, and related parties except as provided in Clause 2 of this Article.

2. To manage the self-borrowing and self-repayment foreign borrowing limit, when necessary, the Governor of the State Bank of Vietnam decides to apply conditions regarding foreign borrowing costs; decides and announces the ceiling of foreign borrowing costs for each period.

Chapter III

ADDITIONAL PROVISIONS

Article 10. Regarding the Borrower being a credit organization, a foreign bank branchớ1. Conditions for short-term foreign borrowing:i a) Credit organizations and foreign bank branches must comply with the State Bank's regulations on safety ratios in banking operations, except where non-compliance with legal provisions on safety ratios has been approved by the Prime Minister or the Governor of the State Bank in accordance with the law;

b) Credit organizations and foreign bank branches may only borrow short-term funds from abroad to supplement short-term credit capital.

2. Conditions for medium- and long-term foreign borrowing:

Credit organizations and foreign bank branches may only borrow medium- and long-term funds from abroad when they comply with the State Bank's regulations on safety ratios in banking operations, except for the following two cases:

a) Non-compliance with legal provisions on safety ratios has been approved by the Prime Minister or the Governor of the State Bank in accordance with the law;

b) Medium- and long-term foreign loans that meet the conditions to be included in the second-tier capital of credit organizations and foreign bank branches, and the implementation of such loans helps credit organizations and foreign bank branches meet the regulations on safety ratios.

Article 11. Regarding the Borrower not being a credit organization, a foreign bank branch

a) The Borrower shall not borrow short-term funds for purposes of using medium- and long-term capital;

b) For the Borrower being a state-owned enterprise, short-term foreign loans of state-owned enterprises must be approved by the competent authority in terms of policy, reviewed, and accepted according to the law on the division and delegation of responsibilities and obligations of the state owner towards state-owned enterprises and state capital invested in enterprises.êa) For the Borrower being a state-owned enterprise, medium- and long-term foreign loans of state-owned enterprises must be approved by the competent authority in terms of policy, reviewed, and accepted according to the law on the division and delegation of responsibilities and obligations of the state owner towards state-owned enterprises and state capital invested in enterprises. For coal-fired thermal power plants where the enterprise holds 100% of the registered capital and uses 100% of its own capital to invest in the project approved by the competent authority, E is determined as 100%;b) For the Borrower not being a state-owned enterprise:

b) Credit organizations and foreign bank branches may only borrow short-term funds from abroad to supplement short-term credit capital.

(i) In the case where the Borrower has a project using foreign loan capital and has obtained an investment certificate, the balance of medium- and long-term debt (including domestic debt) of the Borrower serving the project shall not exceed the difference between the total investment capital and the registered capital contribution at the investment certificate;

(ii) In the case where the Borrower borrows abroad to implement production and business plans, investment projects without obtaining an investment certificate, the balance of medium- and long-term debt (including domestic debt) of the Borrower shall not exceed the total loan capital demand at the production and business plan, investment project already approved by the competent authority in accordance with the law.

a) Non-compliance with legal provisions on safety ratios has been approved by the Prime Minister or the Governor of the State Bank in accordance with the law;

1. This Circular takes effect from May 15, 2014.

2. Abolish the provisions in Chapter II of Circular 09/2004/TT-NHNN dated December 21, 2004 of the State Bank guiding foreign borrowing and repayment by enterprises.

Foreign borrowing agreements of the Borrower that have taken effect before this Circular takes effect shall continue to be implemented in accordance with the signed borrowing agreement. Any amendments or supplements to the above-mentioned foreign borrowing agreements from the date this Circular takes effect shall only be carried out if the amended or supplemented content complies with the provisions of this Circular.

The Director of the Office, the Head of the Department of Foreign Exchange Management, the Heads of units under the State Bank, the Governors of the State Bank branches in provinces and centrally-administered cities, the Chairmen of the Board of Directors, the Chairmen of the Board of Members, and the General Managers (Directors) of credit organizations and foreign bank branches are responsible for organizing the implementation of this Circular.

Chapter IV

IMPLEMENTING PROVISIONS

Article 12. Implementation Provisions

1. This Circular takes effect from May 15, 2014.

2. Repeal the provisions in Chapter II of Circular 09/2004/TT-NHNN dated December 21, 2004, issued by the State Bank of Vietnam guiding foreign borrowing and repayment by enterprises.

Article 13. Transitional Provisions

Foreign loan agreements of the Borrower that were effective before this Circular takes effect shall continue to be implemented according to the signed loan agreement. Any amendments or supplements to the aforementioned foreign loan agreements from the date this Circular takes effect shall only be carried out when the amended or supplemented content complies with the provisions of this Circular.

Article 14. Implementation Organization

The Director of the Office, Heads of the Department of Foreign Exchange Management, Heads of units under the State Bank of Vietnam, Governors of the State Bank of Vietnam branches in provinces and centrally governed cities, Chairmen of the Board of Directors, Chairmen of the Board of Members, General Directors (Directors) of credit organizations, and foreign bank branches are responsible for organizing the implementation of this Circular.