4. Note the purpose of using foreign loans
When borrowing foreign capital, Vietnamese enterprises need to clearly note that the purpose of using this loan must comply with the provisions of law. Specifically, according to the provisions of Article 5 of Circular No. 12/2014/TT-NHNN dated March 31, 2014 of the State Bank of Vietnam, the borrower is allowed to borrow foreign capital to serve the following purposes:
1. Implement production and business plans, investment projects using foreign loans of the following subjects:
b) Of the enterprise in which the Borrower participates in direct investment capital (only applicable to cases of medium and long-term foreign loans). In this case, the Borrower's loan limit on the total loan turnover serving the production and business plan or investment project must not exceed the Borrower's capital contribution ratio in the enterprise in which the Borrower participates in contributing capital.
Production and business plans and investment projects using foreign loans specified in this Clause must be approved by competent authorities in accordance with relevant provisions of Vietnamese law and in accordance with the scope of the establishment license, enterprise registration certificate, business registration certificate, investment certificate, cooperative registration certificate, cooperative union registration certificate of the Borrower or of the enterprise in which the Borrower participates in direct investment capital contribution.
2. Restructuring the Borrower's foreign debts without increasing borrowing costs.
Note the purpose of using foreign loans
5. Procedures for registering for foreign loans without government guarantees
When borrowing foreign capital, in addition to ensuring the conditions prescribed by law, Vietnamese enterprises also need to ensure their full rights and obligations according to the provisions of law.
In particular, based on Article 13 of Decree No. 219/2013/ND-CP dated December 26, 2013 of the Government, Vietnamese enterprises borrowing foreign capital will have the following rights:
1. Decide on the form of foreign loans suitable to the needs and purposes of use on the basis of compliance with the provisions of relevant laws
2. Select a licensed credit institution to implement foreign loans according to the provisions of law.
3. Request to open a foreign currency account abroad to receive loans, and fulfill commitments under the loan agreement with the foreign lender according to the regulations of the State Bank.
4. Purchase foreign currency at licensed credit institutions when performing foreign debt repayment obligations as committed and agreed upon in loan agreements.
At the same time, according to the provisions of Article 14, Vietnamese enterprises will have the following obligations when borrowing foreign capital:
1. Use foreign loans for the right purposes, in accordance with the scope of operations of the Borrower and in compliance with the provisions of law.
2. Be responsible for the legal capacity, financial capacity, and ability to perform the loan of the foreign lender.
3. Be responsible for signing and implementing foreign loan agreements and other related agreements. Do not sign agreements with contents contrary to the provisions of Vietnamese law.
4. Be responsible for self-borrowed and self-paid foreign debts and bear all risks when implementing foreign loans by self-borrowing and self-paying.
5. Comply with the regulations of the State Bank of Vietnam on conditions for borrowing and repaying foreign debts; Carry out registration, registration of changes to foreign loans; open and use accounts, withdraw capital and transfer money to repay foreign loans.
6. Comply with the provisions of this Decree, regulations on foreign exchange management, other relevant provisions of Vietnamese law and international practices in self-borrowed and self-repaid foreign borrowing and debt repayment activities.
7. Comply with the reporting regime as prescribed by law on self-borrowed and self-repaid foreign borrowing and debt repayment.
8. Be responsible for the accuracy and validity of records, documents and vouchers presented to licensed credit institutions and foreign credit institutions (in cases where they are permitted to open and use foreign currency accounts abroad) when conducting transactions related to foreign loans.
9. Comply with the requests of competent authorities during the inspection, examination and supervision of foreign borrowing and debt repayment activities in accordance with the provisions of law.
Procedures for registering for foreign loans without government guarantees
Borrowing foreign capital without government guarantees brings both great opportunities and challenges for Vietnamese enterprises. To make the most of these opportunities, enterprises need to have a solid financial strategy, improve risk management capacity and prepare carefully before accessing international capital sources. Autonomy and flexibility in using borrowed capital will help enterprises not only ensure financial security but also contribute to improving competitiveness in the international market.
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