Borrowing from foreign capital things to note

Recently, the world financial markets have been very volatile. Countries also have moves to monitor and strictly manage monetary and exchange rate policies. The management of foreign currency flows into and out of a country is very important in the management of exchange rates as well as other monetary policies. Capital inflows from abroad into Vietnam recently are very large, through direct and indirect investment, through import-export and remittances from abroad. The monitoring management needs to be more closely monitored than ever.


Currently, businesses, especially foreign enterprises in Vietnam, in the course of business, the company must also mobilize loans from abroad or from parent companies in foreign countries to pour capital into Vietnam to expand scope of production and business. When making foreign loans, these companies must register with the State Bank of Vietnam.


On February 26, 2016, The State Bank issued Circular No. 03/2016/TT-NHNN guiding a number of contents on foreign exchange management for foreign borrowing and repayment of enterprises. The above-mentioned Circular referred to as “Circular 03” specifies the procedures for registering, registering of change of foreign loans of enterprises: Foreign loans are not guaranteed by the Government, also known as self-repayment loans and foreign loans guaranteed by the Government in any form of borrowing (loan contracts, loan entrustment contracts, etc.). In Article 9 of “Circular 03”, the loan must be registered as follows:


“Loans subject to registration with the State Bank include:

1. Foreign medium and long-term loans

2. The short-term loan is extended and the total loan term is over 01 (one) year.

3. The short-term loan has no contract of extension but the principal is outstanding at the time of round 1 (one) year from the first date of capital withdrawal, except for cases where the borrower completes repaying the loan within 10 (ten) days from the time of round 01 (one) year from the first date of capital withdrawal. ”


The fact that a Vietnamese Company borrows capital from a foreign organization or individual may be guaranteed by the Government or not guaranteed by the Government, it must also register for a loan, register of adjustment or supplement of the loan with the State Bank.


Failure to register for a foreign loan may subject to administrative sanctions in accordance with the provisions of Decree No. 96/2014/NĐ-CP regarding the sanction of administrative violations in the field of credit, banking, specifically at Article 24 “Violations of foreign exchange activity”.


Point đ Clause 2 Article 24 “Failure to comply with the provisions of the law on administrative procedures for the registration, registration for change of foreign loans, international bond issue; registration, registration for change of offshore loans, collection of guarantee debt for non-residents; registration, registration for change of account, progress of investment capital transfer and other administrative procedures related to other capital transactions; ” will be fined from 40,000,000 VND to 80,000,000 VND.


Point a Clause 5 ” The failure to abide by the laws on foreign borrowing and repayment; lending and recovering foreign debts; guarantee for non-residents and other capital transactions. Except for the violations specified in Points đ and h, Clause 2, Article 24 of Decree 96/2014 / ND-CP on sanctioning administrative violations in credit and banking sector ” will be fined from VND 150,000,000 to VND 200,000,000


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