Circular 12/2022/TT-NHNN on foreign exchange management for foreign loans and debt repayment by enterprises sets out several important regulations, especially regarding the registration of foreign loans. Below is a detailed guide:
1. Foreign loans must be registered.
Article 11 of Circular 12/2022/TT-NHNN stipulates that the following foreign loans must be registered:
Loans that must be registered with the State Bank include:
1. Medium and long-term foreign loans.
2. Short-term loans with extended principal repayment periods where the total loan term exceeds one year.
3. Short-term loans without extension agreements but with outstanding principal (including compounded interest) at the time of one year from the date of the first disbursement, except in cases where the borrower completes repayment of the aforementioned principal within 30 working days from the date of the first disbursement.
2. Which types of loans do not require registration?
There are 4 types of loans that do not require registration with the State Bank of Vietnam:
1. Short-term loans (foreign loan agreements (appendices to the agreement) with a loan term of less than 1 year).
2. Short-term foreign loans without extension agreements, with outstanding principal (including compounded interest) at the time of one year from the date of the first disbursement, and the borrower completes repayment of the aforementioned outstanding principal within 30 working days from the date of the first disbursement.
3. Borrowers are not required to register loans when signing agreements with non-residents that do not have the force to withdraw funds, such as framework credit agreements, memoranda of understanding, or other similar agreements.
4. Self-borrowed and self-repaid loans in the form of deferred payment for imported goods are not subject to registration or registration of changes to foreign loans as stipulated in Circular 12.
3. Entities required to register or amend loan agreements at the State Bank of Vietnam.
The borrower registers or registers changes to the loan, including:
- The borrower enters into a foreign loan agreement with a non-resident lender.
- The organization is responsible for directly repaying the principal in cases where a credit institution or foreign bank branch signs a loan-re-lending agreement with a non-resident principal.
- The party obligated to repay the debt under a debt instrument issued outside the territory of Vietnam to a non-resident.
- The lessee in a financial lease agreement with the lessor is a non-resident.
- The organization inheriting the debt repayment obligations of foreign loans is subject to registration and registration changes as stipulated in this Circular in cases where the borrower is currently undertaking a foreign loan and undergoes division, separation, merger, or acquisition.
4. How to calculate the loan term to determine registration obligations.
1. For the medium and long-term foreign loansThe loan term is determined from the expected date of the first disbursement to the expected date of the final principal repayment, based on the provisions of the foreign loan agreement.
2. For the Short-term loans with extended principal repayment periods where the total loan term exceeds one year.The loan term is determined from the date of the first disbursement to the expected date of the final principal repayment, based on the provisions of the foreign loan agreement and the foreign loan extension agreement.
3. For loans specified in Clause 3, Article 11 of this Circular, the loan term is determined from the date of the first disbursement to the expected date of the final principal repayment.
4. The withdrawal date stipulated in this Article is:
a) The date the money is credited to the borrower's account for loans disbursed in cash;
b) The date on which the lender makes payment to the non-resident for the provision of goods or services under a contract for the sale of goods or services with the resident borrower;
c) The date on which the borrower is recognized as having fulfilled its payment obligations to the lender in cases where the parties choose to withdraw medium- and long-term foreign loan funds through clearing payments as stipulated in point d, clause 1, Article 34 of this Circular.
d) The date on which the borrower takes possession of the leased asset for loans in the form of foreign financial leases, in accordance with relevant legal regulations;
e) The date the borrower is granted the Certificate of Business Registration, the License for Establishment and Operation under specialized laws, the date of signing the investment contract under the public-private partnership method (PPP contract), the date the parties sign the foreign loan agreement to convert the investment preparation funds into loan capital (whichever date comes later), applicable to foreign loans arising from the conversion of investment preparation funds of projects that have been granted Investment Registration Certificates into foreign loan capital in accordance with the law on foreign exchange management for foreign direct investment in Vietnam.
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