Our company currently has a short-term loan from the Thailand parent company. We are considering converting this loan into a medium or long-term loan to support an investment project. Could you please advise if this conversion is possible? If so, what legal regulations must we adhere to, and what is the specific process?
According to legal regulations, when our company converts a short-term loan into a medium or long-term loan, we need to inform and re-register the loan with the State Bank of Vietnam.
1. Conditions:
General conditions:
- The foreign loan agreement must be made in writing. In case the foreign loan agreement is made in the form of electronic messages, it must comply with provisions of law on electronic transactions;
- The foreign loan agreement must be signed before or on the day on which the foreign loan capital is withdrawn. Therefore, to be able to borrow a medium or long term loan from Thailand, your company must fulfill the general conditions as above. In addition to the general conditions, your Company needs to satisfy the specific conditions regarding Foreign Loan Purpose and Foreign Loan Limit as below.
Specific Conditions:
Purposes of foreign loan
The borrower may only use a medium/long-term foreign loan for the following purposes:
+ Executing its investment projects;
+ Executing its business plans or other projects;
+ Restructuring its foreign debts. Limit on foreign loan
- Since the company's borrowing purpose is to implement an investment project, the loan limit is regulated as follows::
+ The sum of principal amounts does not exceed the loan limit of the investment project;
+ The limit on borrowed capital of the investment project is the difference between the total investment capital of the investment project and the paid-in capital of investors as specified in the IRC or written approval for investment guidelines.
2. Procedure for loan registration
Step 1: Prepare the foreign loan registration application:
+ In case of declaration on the website: the borrower prints the application from the website, signs and stamps;
+ In case of not declaring on the website: the borrower completes the foreign loan registration form according to Appendix 01 issued with this Circular.
Step 2: Submit the application:
30 working days from the date of signing the agreement to renew the foreign loan agreement from short-term to medium- or long-term for the loans in which the signing date of extension is within 01 year from the date of first withdrawal of loan proceeds.
Step 3: The State Bank issues a written confirmation or refusal to confirm the loan registration:
● 12 (twelve) working days of receipt of valid and sufficient dossiers from borrowers in the event that borrowers filled in the loan declaration form on the website;
● 15 (twelve) working days of receipt of valid and sufficient dossiers from borrowers in the event that borrowers failed to fill in the loan declaration form on the website;
3. Loan registration dossier:
- Loan registration form;
- Copy of legitimate dossiers of the borrower;
- Copy or original of written proof of borrowing purposes;
- Copy of foreign document and Vietnamese translation of foreign loan agreements and agreements on renewal of short-term loans into medium-term or long-term loans (if any);
- Copy of foreign document and Vietnamese translation of written guarantee commitment (letter of guarantee, contract of guarantee or other commitments) in terms of secured loans;
- The copy of the competent authority’s written approval for foreign loans;
- An account service provider’s confirmation required as to the withdrawal of loan proceeds, repayment of principal and interest until the date of loan registration;
- Documents or invoices indicating legally distributed Vietnam-dong profits gained from direct investments of the creditor who is the foreign investor making the capital contribution to the borrower, and a statement of account service providers on distribution and transmission of profits to the home country of the creditor are required to serve as evidence of disbursement of foreign loans in respect of foreign borrowing in Vietnam dong in accordance with prevailing regulations on conditions for foreign borrowing in Vietnam dong.
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