Circular No. 37/2013/TT-NHNN guiding certain contents on foreign exchange management for overseas lending and recovery of guarantees for non-residents

CIRCULAR

Guidelines on certain aspects of foreign exchange management for lending abroad and recovering guarantees for non-residents

đi nước ngoài và thu hồi nợ bảo lãnh cho người không cư trú.

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Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

Pursuant to the Law on Credit Institutions No. 47/2010/QH12 dated June 16, 2010;

Pursuant to Decree No. 28/2005/PL-UBTVQH11 on Foreign Exchange dated December 13, 2005;

Pursuant to Decree No. 06/2013/PL-UBTVQH13 dated March 18, 2013 amending and supplementing certain articles of the Foreign Exchange Decree;

Pursuant to Decree No. 156/2013/NĐ-CP dated November 11, 2013 of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of the Department of Foreign Exchange Management,

The Governor of the State Bank of Vietnam issues this Circular guiding certain aspects of foreign exchange management for lending abroad and recovering guarantees for non-residents.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

2. Clause 2 and Clause 3 of Article 2 are amended and supplemented as follows:

a) Opening and using accounts to implement foreign loans, fulfill guarantee obligations, and recover guarantees for non-residents of economic organizations after being permitted by the Prime Minister to lend and provide guarantees for non-residents;

c) Registration procedures, registration change procedures for foreign loans; registration procedures, registration change procedures for recovered guarantees arising from fulfilling guarantee obligations for non-residents of economic organizations;

2. In addition to the provisions of this Circular, credit institutions and foreign bank branches providing loans, recovering foreign debts, and guarantees for non-residents shall comply with current regulations of the State Bank of Vietnam on foreign exchange management for lending and recovering foreign debts of credit institutions and regulations on bank guarantees.

Article 2. Applicability

2. Economic organizations permitted by the Prime Minister to lend to non-residents (hereinafter referred to as "Lender").

3. Economic organizations permitted by the Prime Minister to provide guarantees for non-residents (hereinafter referred to as "Guarantor").

4. Organizations and individuals related to the activities of lending abroad and providing guarantees for non-residents of economic organizations, credit institutions, and foreign bank branches.

Article 3. Explanation of Terms

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

Guaranteeing non-residents means that credit institutions, foreign bank branches, and resident economic organizations commit in writing with the recipient of the guarantee to perform financial obligations on behalf of the non-resident beneficiary when the non-resident beneficiary fails to perform or performs incompletely the obligations committed to the recipient of the guarantee.

Recovering guarantee debt means that the Guarantor recovers the debt amount from the non-resident beneficiary after performing the guarantee obligation.

Loan agreement is a written agreement between the Lender and the non-resident borrower outside the country that is effective for disbursement and debt recovery, stipulating terms and conditions of the foreign loan regarding the purpose of using borrowed funds, loan methods, loan amount, interest rate, term, repayment period, repayment method, content about securing the loan (if any), and other relevant commitments.

Guarantee issuance agreement is a written agreement between the Guarantor, the guaranteed party, and related parties (if any), stipulating the form of receiving debt and the responsibility for repayment of the guaranteed party to the Guarantor.

Guarantee commitment is the Guarantor's commitment to the recipient of the guarantee that the Guarantor will perform financial obligations on behalf of the non-resident beneficiary when the non-resident beneficiary fails to perform or performs incompletely the obligations committed to the recipient of the guarantee. The guarantee commitment can be implemented in the form of a Guarantee Letter, a Guarantee Contract, and other forms agreed upon by the parties based on not violating Vietnamese laws.

Registration, registration change of foreign loans is the act of the Lender registering with the State Bank of Vietnam on foreign loans or changes related to foreign loans already confirmed by the State Bank of Vietnam in the confirmation registration document in accordance with this Circular.

Registration, registration change of recovered guarantee debt is the act of the Guarantor registering with the State Bank of Vietnam on recovered guarantee debt or changes related to recovered guarantee debt already confirmed by the State Bank of Vietnam in the confirmation registration document in accordance with this Circular.

Confirmation registration is a document of the State Bank of Vietnam confirming that the Lender and Guarantor have registered foreign loans, recovered guarantee debt in accordance with this Circular.

Confirmation of registration change is a document of the State Bank of Vietnam confirming that the Lender has registered changes to foreign loans or the Guarantor has registered changes to recovered guarantee debt when changing contents already confirmed by the State Bank of Vietnam in the confirmation registration document.

Service-providing credit institution is a credit institution or foreign bank branch where the Lender and Guarantor open accounts to implement foreign loans and guarantees for non-residents in accordance with current laws.

Guarantee implementation account is an account opened by the Guarantor at one (01) service-providing credit institution to fulfill guarantee obligations, recover guarantee debts from non-residents, and related transaction fees.

13. An overseas loan account is an account opened by the Lender at one (01) credit institution providing account services to implement the disbursement and recovery of the overseas loan.

Article 4. Responsibilities of the Lender and Guarantor

1. Shall be responsible for researching the legal capacity and financial capacity of the Borrower and the non-resident beneficiary of the guarantee to ensure the recovery of the principal and interest according to the loan agreement and the guarantee agreement.

2. Shall bear the legal and financial risks associated with entering into and performing the loan agreement, the guarantee commitment, the guarantee agreement, and other related agreements.

3. Shall comply with current laws and regulations on foreign exchange management, overseas lending and debt recovery, guarantee regulations, asset security regulations, and other relevant domestic and foreign laws when signing and performing the loan agreement, the guarantee commitment, and the guarantee agreement.

Article 5. Subjects to Register and Amend Overseas Loan and Guarantee Debt Recovery

1. Economic organizations that provide overseas loans and guarantees for non-residents.

4. In cases where the loan agreements and guarantee agreements for non-residents involve at least two (02) economic organizations, each economic organization shall register and amend the overseas loan and guarantee debt recovery registration for its own portion of the loan and guarantee.

If the debt arising from the performance of the guarantee obligation is paid by the Beneficiary to the Guarantor within thirty (30) days from the date of performance of the guarantee obligation, the Guarantor does not need to register the guarantee debt recovery as stipulated in this Circular.

Chapter II

REGISTRATION AND AMENDMENT OF OVERSEAS LOAN

BY ECONOMIC ORGANIZATIONS

1. Application for registration of overseas loan (Annex No. 01 attached to this Circular).

2. Legal documents of the Lender including certified copies of the Business Registration Certificate (or Enterprise Registration Certificate), Investment Certificate, License or Decision on Establishment of the Lender as prescribed by law (if applicable) and any amendments (if applicable).

3. Certified copy (with confirmation from the Lender) of the approval document of the Prime Minister for the economic organization's overseas loan.

4. Report on the foreign currency arrangement plan of the economic organization for overseas lending.

5. Legal documents of the Borrower including certified copies of the original and Vietnamese translation of the investment approval document issued by the competent authority of the receiving country. In cases where there is no investment approval procedure in the borrower's country/territory, the Lender shall submit certified copies of the original and Vietnamese translation of the confirmation document issued by the competent authority of the receiving country regarding the business registration or equivalent legal documents (applicable in cases where the Borrower is a business with participation of Vietnamese enterprises through direct investment).

6. Certified copies and Vietnamese translations (with confirmation from the Lender) of the overseas loan agreement.

7. Certified copies and Vietnamese translations (with confirmation from the Lender) of any documents and agreements related to the guarantee and security for the overseas loan (if any).

1. Within thirty (30) days from the date of signing the loan agreement and before disbursing the loan, the Lender shall directly send or send via postal service to the State Bank (Department of Foreign Exchange Management) one (01) set of documents as prescribed in Article 7 of this Circular.

2. Within thirty (30) days from the date of receiving complete and valid documents, the State Bank shall send the Lender a confirmation document on the registration of the foreign loan including the following main contents: the Lender; the Borrower; basic conditions of the foreign loan such as the loan amount, purpose of the foreign loan, interest rate, penalty interest, fees, guarantee form, disbursement plan, debt recovery plan (principal and interest); financial institution providing account services and other contents related to the foreign loan (if any). In case of refusal to confirm the registration, the State Bank shall issue a document clearly stating the reasons.

Article 9. Documents for registering changes to foreign loans

1. In case of any change to any content related to the foreign loan as stated in the State Bank's confirmation document on the registration of the foreign loan, the Lender shall be responsible for registering the change to the foreign loan according to the provisions of this Circular.

a) Application for changing the foreign loan (Appendix No. 02 attached to this Circular).

b) Copies and Vietnamese translations of the amended agreements signed (with the Lender's confirmation of the accuracy of the copies and translations) in cases where the changes require agreement between the parties.

c) Copies and Vietnamese translations (with the Lender's confirmation of the accuracy of the copies and translations) of the document stating the guarantor's approval of the changed contents in cases where the foreign loan is guaranteed by a third party.

d) Copy (with the Lender's confirmation) of the document stating the Prime Minister's approval of the changed contents of the economic organization's foreign loan (in cases of increasing the loan amount or extending the term of the foreign loan or changing the lender).

e) Confirmation from the financial institution providing account services regarding the disbursement and debt recovery situation up to the date of requesting the change registration confirmation (applicable in cases of changing the disbursement and debt recovery plans).

f) Document from the Lender explaining in detail about the changed contents of the foreign loan (applicable in cases where there is no document component as specified in point b, c of this Clause).

1. Within thirty (30) days from the date of signing the amended foreign loan agreement and before implementing the changes, the Lender shall directly send or send via postal service to the State Bank (Department of Foreign Exchange Management) one (01) set of documents as prescribed in Article 9 of this Circular.

2. Within thirty (30) days from the date of receiving complete and valid documents, the State Bank shall send the Lender a confirmation document on the registration of the change to the foreign loan.

3. In case of refusal to confirm the registration of the change to the foreign loan, the State Bank shall issue a document clearly stating the reasons.

Chapter III

REGISTRATION AND REGISTRATION OF CHANGES TO GUARANTEED DEBT RECOVERY ACCOUNTS

1. In the case of the recovery of guaranteed debt from the guaranteeing activities for non-residents by economic organizations, the registration documents shall include:

a) The application form for registering the recovery of guaranteed debt (Annex No. 03 attached to this Circular);

b) Legal documents of the Guarantor including certified copies of the Business Registration Certificate (or Enterprise Registration Certificate), Investment Certificate, License or Decision on establishment of the Guarantor according to the provisions of the law (if applicable) and any amendments (if applicable);

c) A copy (certified by the Guarantor) of the Prime Minister's approval document for the economic organization to guarantee for non-residents;

d) A copy and Vietnamese translation (certified by the Guarantor) of the document from the beneficiary requesting the Guarantor to fulfill its guarantee obligation;

đ) A copy and Vietnamese translation (certified by the Guarantor) of the guarantee commitment, guarantee issuance agreement signed, agreement (or notification) regarding the recovery of debt that the Guarantor has paid on behalf of the beneficiary;

e) A copy (certified by the credit institution providing account services) of the document proving the Guarantor's transfer of funds to fulfill the guarantee obligation.

a) The application form for registering the recovery of guaranteed debt (Annex No. 03 attached to this Circular);

b) A copy and Vietnamese translation (certified by the Guarantor or its representative) of the document from the beneficiary requesting the Guarantor to fulfill its guarantee obligation;

c) A copy and Vietnamese translation (certified by the Guarantor or its representative) of the guarantee commitment, guarantee issuance agreement signed, agreement (or notification) regarding the recovery of debt that the Guarantor has paid on behalf of the beneficiary;

d) A copy (certified by the Guarantor or its representative) of the document proving the Guarantor's transfer of funds to fulfill the guarantee obligation;

đ) A copy (certified by the Guarantor's representative) of the agreement among Guarantors regarding the authorization of one Guarantor to represent others in registering the recovery of guaranteed debt with the State Bank (applicable to joint guarantees).

1. Within fifteen (15) working days from the date of transferring funds to fulfill the guarantee obligation, the Guarantor or its representative (in the case of a guarantee issued by a credit institution or foreign bank branch) shall directly send or send via postal service to the State Bank (Department of Foreign Exchange Management) one (01) set of documents as prescribed in Article 11 of this Circular.

2. Within fifteen (15) working days from the date of receiving complete and valid documents from the Guarantor or its representative, the State Bank shall send to the Guarantor or its representative a confirmation document for the registration of the recovery of guaranteed debt including the following main contents: Guarantor or Guarantor's Representative; Beneficiary; Beneficiary's Counterparty; Basic conditions of the recovery of guaranteed debt: guarantee limit, amount guaranteed, purpose of guarantee, interest rate for debt recovery, penalty interest, fees, debt recovery plan; credit institution providing account services and other relevant contents related to the recovery of guaranteed debt (if any).

3. In cases where the confirmation of the change registration is refused, the State Bank shall issue a document clearly stating the reasons.

In case of any change to the content related to the debt recovery from guarantee repayment as stated in the confirmation document issued by the State Bank regarding the registration of debt recovery from guarantee repayment, the guarantor or its representative shall be responsible for registering the change to the debt recovery from guarantee repayment according to Article 14 of this Circular. The documents for registering changes to the debt recovery from guarantee repayment include:

1. Application for registering changes to the debt recovery from guarantee repayment (as per Appendix No. 04 attached to this Circular).

2. Copies and Vietnamese translations of agreements on changing guarantee commitments, guarantee issuance agreements signed (with confirmation from the Guarantor or its representative about the accuracy of the copies and translations) in cases where the changes require agreement among the parties.

3. Copy (with confirmation from the Guarantor) of the document stating the Prime Minister's approval on the content of the change related to guaranteeing non-residents by economic organizations (in cases of increasing the guarantee amount of economic organizations or extending the guarantee period or changing the guarantor).

4. Confirmation from the financial institution providing account services on the performance of guarantee obligations and debt recovery up to the date of requesting confirmation of the change registration (applicable in cases of registering changes to the debt recovery plan).

5. Document from the guarantor explaining clearly the content of the change to the debt recovery from guarantee repayment (applicable in cases where there are no components of the documents specified in Clause 2 and Clause 3 of this Article).

1. Within thirty (30) days from the date of signing the agreement on changing the debt recovery from guarantee repayment, the Guarantor or its representative shall directly send or send via postal service to the State Bank (Department of Foreign Exchange Management) one (01) set of documents as stipulated in Article 13 of this Circular.

2. Within fifteen (15) working days from the date of receiving complete and valid documents from the Guarantor or its representative, the State Bank shall send the Guarantor or its representative a document confirming the registration of changes to the debt recovery from guarantee repayment.

3. In case of refusal to confirm the registration of changes to the debt recovery from guarantee repayment, the State Bank shall issue a document specifying the reasons.

Chapter IV

FOREIGN LOAN ACCOUNTS, GUARANTEE ACCOUNTS FOR NON-RESIDENTS

IMPLEMENTATION OF GUARANTEES FOR NON-RESIDENTS

Article 15. Foreign loan accounts and guarantee accounts for non-residents of economic organizations

1. Prior to conducting transactions related to foreign loans, economic organizations shall open one (01) foreign loan account at one (01) financial institution providing account services. Transactions related to foreign loans (disbursement of loan capital; recovery of principal, interest, and other fees) must be conducted through the foreign loan account.

2. Prior to conducting transactions related to guarantees for non-residents, economic organizations shall open one (01) guarantee account for non-residents at one (01) financial institution providing account services. Transactions related to guarantees (repayment on behalf of the guaranteed party, recovery of debts from the guarantor, various fees) must be conducted through the guarantee account.

3. In cases where economic organizations provide loans or guarantees to non-residents who are foreign enterprises with participation in direct investment by the lender or guarantor, the foreign loan account and the guarantee account are considered direct foreign investment accounts of the economic organization in accordance with current regulations on foreign exchange management for direct foreign investment activities.

Credit institutions and foreign bank branches that act as guarantors for non-residents shall be responsible for monitoring transactions related to guarantee implementation and recovery of guarantee debts through accounts in accordance with current regulations on accounting and bookkeeping for credit institutions and foreign bank branches; they shall be responsible for ensuring the execution of transactions related to guarantees and recovery of guarantee debts in accordance with the contents of the registration confirmation documents issued by the State Bank regarding the registration and changes in the recovery of guarantee debts of credit institutions and foreign bank branches.

Article 17. Responsibilities of Credit Institutions Providing Account Services

When conducting transactions involving transferring funds from loan accounts abroad and guarantee implementation accounts of lenders and guarantors, credit institutions providing account services shall be responsible for verifying and cross-checking documents presented by lenders and guarantors to ensure compliance with the terms of foreign loans; guarantee obligations, and recovery of guarantee debts confirmed by the State Bank and in accordance with current legal provisions.

Chapter V

REPORTING SYSTEM

Article 18. Reporting Requirements for Lenders that are Economic Organizations

1. Monthly (no later than the 10th day of the following month) and annually (no later than January 31 of the following year), economic organizations acting as lenders shall report to the State Bank (Department of Foreign Exchange Management) on the situation of foreign loans (in accordance with Appendix No. 05 attached to this Circular).

2. In case of extraordinary circumstances, economic organizations acting as lenders shall report to the State Bank upon request.

Article 19. Reporting Requirements for Guarantors

1. Within ten (10) working days from the date of signing the guarantee commitment, economic organizations acting as guarantors shall be responsible for reporting to the State Bank (Department of Foreign Exchange Management) on the guarantee provided to non-residents according to the attached model at Appendix 06 of this Circular.

2. Monthly (no later than the 10th day of the following month) and annually (no later than January 31 of the following year), economic organizations acting as guarantors shall report to the State Bank (Department of Foreign Exchange Management) on the situation of debt recovery arising from the fulfillment of guarantee obligations (in accordance with Appendix 07 attached to this Circular).

4. In case of extraordinary circumstances, guarantors (or their representatives) shall report to the State Bank upon request.

Article 20. Reporting Requirements for Credit Institutions Providing Account Services

1. Credit institutions providing account services shall report on the disbursement of loan amounts, recovery of foreign debts (principal and interest); transfer of funds to fulfill guarantee obligations and recovery of guarantee debts in accordance with the State Bank's reporting and statistical system applicable to units under the State Bank and credit institutions, foreign bank branches.

2. In case of extraordinary circumstances, credit institutions providing account services shall report to the State Bank upon request.

Chapter VI

SUPERVISION, INSPECTION, AND VIOLATION HANDLING

Article 21. Inspection, examination, and handling of violations

1. When necessary, the State Bank shall conduct inspection and examination work to assess compliance with foreign exchange management regulations concerning activities related to lending abroad, guarantees, recovery of guarantee debts by lenders, guarantors of lenders, guarantors, and financial institutions providing account services as stipulated in this Circular.

2. Lenders, guarantors, and financial institutions providing account services shall be responsible for providing all necessary documents and materials to ensure timely and effective inspections and examinations.

3. In cases of violation of the provisions of this Circular, depending on the severity of the violation, lenders, guarantors, and financial institutions providing account services will be subject to penalties under current administrative penalty regulations in the field of currency and banking operations.

Chapter VII

IMPLEMENTATION

Article 22. Implementation Provisions

1. This Circular takes effect from February 14, 2014.

2. Foreign loans issued by economic organizations, guarantees provided for non-residents by economic organizations, credit institutions, and overseas bank branches prior to the effectiveness of this Circular shall continue to be implemented according to registration confirmation documents and registration change confirmation documents (if any) issued by the State Bank. In cases where there are changes agreements and reports arising after the effective date of this Circular, economic organizations, credit institutions, and overseas bank branches shall implement the provisions of this Circular.

Article 23. Implementation Organization

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 governed cities, the Chairmen of the Boards of Directors, the Chairmen of the Management Councils, and the General Managers (Directors) of Credit Institutions and Overseas Bank Branches within their respective functions shall be responsible for organizing the implementation of this Circular./.