Question:
Our company plans to borrow capital from the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) to invest in production and business. To secure the loan, the company intends to pledge all shares of the Vietnam Aircraft Leasing Joint Stock Company – an affiliated company of the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), as BIDV owns more than 11% of the charter capital of the Vietnam Aircraft Leasing Joint Stock Company. Thus, does the current Vietnamese law allow the implementation of the above activity or not?
Answer:
According to the regulations, banks are not allowed to provide loans for capital needs that violate the provisions of law, for the purpose of purchasing bullion gold, for repayment of credit granted by the lending credit institution itself or by other credit institutions, except for special cases as prescribed.
In this case, the Vietnam Aircraft Leasing Joint Stock Company is an affiliated company of the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), as BIDV holds more than 11% of the charter capital of the Vietnam Aircraft Leasing Joint Stock Company.
Clause 5, Article 134 of the Law on Credit Institutions 2024 on cases in which credit extension is prohibited stipulates as follows:
“A credit institution shall not extend credit on the basis of security by shares of that credit institution, or of its subsidiaries or affiliated companies.”
Therefore, the enterprise cannot pledge the above-mentioned shares as collateral to borrow capital from the bank for the purpose of investment in production and business, as this violates the provisions on cases where credit institutions are prohibited from granting credit. The enterprise may replace the collateral with other suitable assets or conduct the loan transaction with another bank in order to comply with the provisions of law.
