Continuing the topic of the previous article about “OVERVIEW OF FOREIGN LOAN ACTIVITIES OF VIETNAMESE ENTERPRISES“, in this article we will mention the obligations that borrowing enterprises must pay attention to complying with/performing after completing the registration of foreign loans with the State Bank (“SBV”) and actual receipt of foreign loans. These obligations include notification, registration of changes to foreign loans (if any) as well as the obligation to periodically report on the use of foreign loans and to keep records of foreign loans. We further note that the content of the article is limited to borrowers who are enterprises operating in Vietnam and not credit institutions or foreign bank branches, which are the most common regulated subjects in practice.

1. Registration of changes to the registration content of foreign loans

The borrower must register with the State Bank when there are changes compared to the contents mentioned in the foreign loan registration confirmation document (“Confirmation Letter”) during the term of the foreign loan. These changes may relate to groups of information recorded in the Confirmation Document, including: (i) information about the parties to the loan (borrower, lender, related parties); (ii) information about the loan (loan purpose, loan amount, loan form, debt/debt repayment currency, loan term, interest rate, penalty interest, fees, capital withdrawal and repayment plan); (iii) information about security measures and the bank serving the security transaction; (iv) information about the bank providing account services; or (v) other groups of information (if any).

In most of these cases, the borrower must submit a change registration application to the State Bank.[1] within 30 working days (“NLV”) from the date (i) the borrower and the lender sign the agreement/implement relevant changes; or (ii) the successor to the debt repayment obligation is granted a business registration certificate or the parties sign an agreement to change the borrower when the original borrower is divided, separated, merged, consolidated and before continuing to withdraw capital and repay the debt; or (iii) the borrower updates the new name and head office address on the National Database on Business Registration; or (iv) the parties involved in the loan change information compared to the Confirmation Document[2].

Before submitting the application, the borrower can declare in advance on the website (not required) and the State Bank will have a written response within 12 working days if it has declared on the website or 15 working days if it chooses to submit the application for change registration directly to the State Bank.

2. Notice of change in foreign loan registration content

According to current regulations, not all changes in the content mentioned in the Confirmation Document must be registered with the State Bank by the borrowing enterprise. In order to simplify administrative procedures, the State Bank allows borrowing enterprises to only need to notify changes in foreign loans on the website.[3] managed by the State Bank in the cases listed below:

1. Change the time of capital withdrawal and principal repayment within 10 NLV compared to the plan stated in the Confirmation Document;
2. Change the address of the borrowing enterprise but do not change the province or city where the head office is located;
3. Change of lender, information related to lenders with syndicated loans with designated representatives of lenders, except in cases where the lender is also the representative and the change of lender changes the representative role;
4. Change of commercial transaction name of the bank providing account services, the bank serving secured transactions;
5. Change the interest and fee payment plan of the loan compared to the confirmed plan but do not change the method of determining interest and fees in the loan agreement. The borrower must prepare a table of interest and fees payable so that the bank providing account services has a basis for checking and monitoring when making money transfers;
6. Change the amount of capital withdrawal, principal repayment, interest, and fees within 100 currency units of the foreign loan currency compared to the amount stated in the Confirmation Document; and
7. Change the actual principal withdrawal and repayment amount of a particular period to less than the amount stated in the repayment plan on the Confirmation Document. Before making the withdrawal and repayment of the remaining amount of that period, the borrower must register the change in the withdrawal and repayment plan for the remaining amount.[4]

Accordingly, borrowing businesses can access the website at the link http://www.qlnh-sbv.cic.org.vn/ or www.sbv.gov.vn, register an account and declare information in the section “2. For businesses that do not have outstanding foreign loans but need to register or register changes to foreign loans”. Detailed instructions can be found at here.

3. Report on the use of foreign loans

Borrowing enterprises are responsible for reporting the loan usage situation to the State Bank. According to current regulations, there are two main types of reports that borrowing enterprises need to make, including:

a. Periodic reports[5] – On the 05th of the month, the borrowing enterprise reports the loan implementation status on the website or in writing according to the form in Appendix 05 of Circular 12 (if the website has technical errors).

Within 10 working days from the date of receiving the report, the SBV branch approves the report on the website (or enters information from the written report). If there is any inaccurate information or information that needs to be clarified, the SBV branch will notify the borrowing enterprise to adjust the data. Within 03 working days from the date of detecting errors in the reports, the borrowing enterprise is responsible for reporting online the loan implementation status with corrected data; at the same time, notify the SBV branch by email.

For short-term loans, the borrowing enterprise must report the usage situation if there is a loan from the parent company or from other member units of the parent company, including information on (i) the initial and final outstanding balance and arising during the period and (ii) the plan to withdraw capital and repay principal and interest for the next period.[6].

For medium and long-term loans, the borrowing enterprise must report the loan usage situation in the borrowed currencies, corresponding to the information on (i) the lender; (ii) loan information (value, loan form, guarantee, type of lender); (iii) loan usage situation in the reporting period (beginning and ending outstanding balance and arising during the period); (iv) capital withdrawal, debt repayment and interest plan in the next period; and (v) the bank providing account services.[7]

b. Ad hoc reporting[8] – In urgent or necessary cases, the borrowing enterprise and/or the bank providing account services must report as required by the State Bank.

4. Foreign loan records storage

In addition to reporting, to serve the inspection and examination of competent state agencies, the borrowing enterprise is responsible for (i) storing documents and papers proving the use of the loan, including documents before and after registering changes, in accordance with the purpose stated in the Confirmation Document.[9]; and (ii) establish a table to track each idle amount in case of term deposits at credit institutions and foreign bank branches in Vietnam (if any)[10] to present if necessary.

[1] Clause 1, Article 17 of Circular 12/2022/TT-NHNN guiding foreign exchange management for foreign borrowing and debt repayment of enterprises issued by the State Bank of Vietnam on September 30, 09 (“Circular 12“).

[2] Clause 2, Article 18, Circular 12.

[3] Website accessible at http://www.qlnh-sbv.cic.org.vn/ or www.sbv.gov.vn

[4] Clause 3, Article 17, Circular 12.

[5] Article 41 Circular 12.

[6] Appendix 05 Circular 12.

[7] Appendix 06 Circular 12.

[8] Article 42 Circular 12.

[9] Clause 4, Article 19, Circular 08/2023/TT-NHNN.

[10] Clause 5, Article 19, Circular 08/2023/TT-NNNN.

Disclaimer: This article was prepared by PTN Law Firm LLC (“PTN Legal”) is for informational purposes only. PTN Legal does not warrant or guarantee the accuracy or completeness of this information. The content of the article may be changed, adjusted, or updated without prior notice. PTN Legal is not responsible for any errors or omissions in this article or damages arising from the use of this article in any case.

Article written by Quach Mai Phuong – Associate and Nguyen Pham Hoang – Legal Assistant