Daily Banking News
$42.18
+1.16%
$162.99
+1.12%
$60.02
+1.23%
$25.72
-0.48%
$276.49
-0.94%
$391.62
-0.06%
$71.16
+0.39%
$100.99
-0.18%
$73.86
-0.16%
$2.44
+0.41%
$18.35
-0.43%
$65.74
+0.02%
$61.81
+0.21%

Legal Issues Regarding Foreign Capital Loans And Method Of Money Transfer


In recent years, there have been positive changes in the country’s economy, together with the increased demand for mobilizing and using the capital of enterprises. Nonetheless, not all enterprises have available capital to continue investing and developing; hence, taking loans from different sources is always an effective solution for enterprises’ financial management. Nowadays, besides borrowing capital from domestic banks, enterprises often seek ways to approach and borrow foreign capital in light of manufacturing expansion, development of business activities and investment projects as well. Within the framework of the Vietnam government’s foreign debt management and current regulations, enterprises borrowing foreign loans, repaying foreign debts must comply with the conditions on the borrowing of foreign loans and repayment of foreign debts; make loan registration, open and use accounts, withdrawal capital, and transfer money, report on loan performance in accordance with regulations of the State Bank. Although most enterprises have strictly complied with the regulations on the borrowing of foreign loans and repayment of foreign debts when borrowing, there are still some that have not yet been carefully searched while implementing leading to the misunderstanding of the regulations and, eventually, unfortunate consequences. Thus, within the scope of this article, acknowledging this issue allows us to highlight certain remarks that the Borrower needs to duly understand and follow to limit faults and violations with respect to the borrowing of foreign loans and repayment of foreign debts without a government guarantee.

To begin with, what is a foreign loan without a government guarantee?

In accordance with Clause 2 Article 3 Decree No. 219/2013/ND-CP, a foreign loan without a government guarantee, also known as “borrowing a foreign loan by the mode of self-borrowing and self-payment), is a loan taken by a borrower by the mode of self-borrowing and self-responsibility for payment to the foreign creditors (“Foreign Loans”).

Thus, a company duly incorporated and operating in Vietnam (including foreign-invested companies) (“the Borrower”) is allowed to borrow capital from foreign organizations, individuals (“the Creditor”) to meet its capital demand, such loan by the Borrower and the Creditor is also deemed to be Foreign Loans and must satisfy the conditions under the law of Vietnam on the borrowing of foreign loans and repayment of foreign debts.

However, regarding a loan whose Creditor is a foreign individual allowed to reside in Vietnam for a duration of 12 months or more (for instance, an individual who has been granted a temporary residence card for a period of 12 months or more), such a loan is not deemed a foreign loan and is not subject to relevant regulations on borrowing foreign loans and repayment of foreign debts.

Remarks on basic legal issues on Foreign Loans

  • Registering with the State Bank

Loans being subject to make or not to make registration with the State Bank include:

  • Short-term foreign loans (“Short-term Loans”) with a maturity not exceeding one year are not subject to registration with the State Bank (except for renewed short-term loans having more than one year of maturity term or non-renewed short-term loans but remain the outstanding principal owed after the tenth day from the date of first fund withdrawal in a full one year).
  • Mid-term and long-term foreign loans (“Mid-term or Long-term Loans”) with the maturities longer than one year or renewed short-term loans or loans remaining the outstanding principal owed after the maturity term ends as above, the Borrower shall carry out the procedures for foreign loan registration with the State Bank.
  • Nonetheless, regarding Mid-term and Long-term Loans made in the form of deferred payment for import of goods, there is no need to register such loans with the State Bank.

The Borrower must submit dossiers to apply for…



Read More: Legal Issues Regarding Foreign Capital Loans And Method Of Money Transfer

Get real time updates directly on you device, subscribe now.

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments

Get more stuff like this
in your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Thank you for subscribing.

Something went wrong.