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In the management of a business, considering the time for applying for a foreign loan is not just a financial decision but an important strategy for growth and expansion as well.
The term of the loan does not only specify the loan period but also affects the business plan and financial goals of the enterprise, it facilitates the management of foreign exchange and foreign investment by state authorities. Recognizing the importance of foreign loan registration, Siglaw would like to share relevant information about foreign loan registration deadlines.
What is a foreign loan?
Foreign loan is a term referring to foreign loans that are not guaranteed by the Government (self-borrowed, self-paid loans), and foreign loans guaranteed by the Government in all forms of foreign loans through contracts, goods import contract with deferred payment, loan entrustment contract, financial leasing contract or issuance of debt instruments on the international market by the borrower.
Who must register for a foreign loan?
The law stipulates 05 subjects that must register for foreign loans, specifically as follows:
- The borrower enters into an agreement of foreign loan with a non-resident lender
- The Party is obliged to pay debt issued outside the territory of Vietnam to non-residents
- The organization is responsible for paying the debt directly to the entrusting party in case a credit institution or foreign bank branch signs an entrusted on-lending contract with the entrusting party who is a non-resident
- The organization that inherits the obligation to repay foreign loans is subject to new registration and registration of changes according to the provisions of this Circular No. 12/2022/TT-NHNN in case the borrower is taking out a foreign loan, it shall divide and separation, consolidation or merger
- The borrower in a financial leasing contract with the lessor is a non-resident
Foreign loans that must be registered with the State Bank of Vietnam
- Medium and long-term loans;
- Short-term loans have the principal repayment period extended if the total loan term is over 1 year;
- Short-term loans with no extension agreement but having principal payment (including accrued interest) at the time of 1 year from the date of first capital withdrawal, unless the borrower completes payment of the principal debt within 30 working days from the date of 1 year from the date of first capital withdrawal.
How to determine the time to register for foreign loans?
For medium and long-term loans: the date is determined from the expected date of first capital withdrawal to the expected date of final principal repayment on the basis of the provisions in the foreign loan agreement.
For short-term loans with the principal repayment period extended and the total loan term is over 1 year: the date is determined from the date of first capital withdrawal to the expected date of final principal repayment on the basis of based on the provisions of foreign loan agreements and foreign loan extension agreements;
For short-term loans without an extension agreement but having remaining principal payment (including re-principal debt) at 1 year from the date of first capital withdrawal: the loan term is determined from the date First withdrawal of capital until the expected date of final principal repayment.
The procedure of registering for foreign loans
Below are the list of documents that need to be prepared:
- Registering form Appendix 01, circular No. 12/2022/TT-NHNN
- Enterprise/Business registration certificate or document with equivalent validity
- Documents proving loan purpose
- For purpose of implementing investment project: Investment Registration Certificate or Investment Approval according to the provisions of investment law and current legal regulations related;
- Implement production and business plans other than investment projects: Prepare plans to use approved foreign loans (or other documents prescribed by law).
- Vietnamese translations of foreign loan agreement and agreement to extend short-term loans to medium or long-term
- Vietnamese translation of Guarantee commitment document (if any)
- Confirmation from the bank providing account services on the situation of capital withdrawal and debt repayment up to the time of loan registration in some cases;
- In case of foreign loan in Vietnamese Dong, it is necessary to provide documents and evidence proving the conditions for foreign loan in Vietnamese Dong or a written explanation of the need for foreign loan in Vietnamese Dong.
Regarding the processing time, the State Bank will review and then issue a document confirming or refusing to confirm the loan registration within 12 – 15 working days from the date of receipt of complete and valid documents. In the case of loans in Vietnamese Dong, which must be reviewed and approved by the Governor of the State Bank, the processing time is 45 working days from the date of receipt of complete and valid documents.
Above are some shares about the deadlines and procedures of registering foreign loans. If you have any questions regarding foreign loan registration procedures, please contact us to receive the most accurate, professional, and effective advice.
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