In the context of Vietnamese enterprises expanding their investment/business activities abroad, lending money from Vietnam to foreign countries is an inevitable part. However, conducting overseas lending activities requires understanding the regulations of the country receiving the loans and strictly complying with relevant regulations of Vietnamese law.
In this article, BLawyers Vietnam provides four key notes that Vietnamese enterprises in this situation must be aware of.
1. Note 1: Registering lending with Vietnamese competent authority
According to Vietnamese law, economic organizations that offer overseas lending to non-residents must register the overseas lending with the Vietnamese competent authority before lending overseas. If the overseas lending agreement to a non-resident is joined by at least 02 economic organizations, each shall proceed with the registration of the overseas lending in relation to their proportion of the loan.
2. Note 2: Dossier for overseas lending registration
The dossier for overseas lending includes the following key documents:
- An application for registration for overseas lending;
- Legal profiles of the Lender and the Borrower;
- Written approval of the Prime Minister for overseas lending of the economic organization (the “Approval”);
- A report on the plan for foreign currency arrangement of the economic organization for overseas lending;
- The overseas lending agreement; and
- Other relevant documents, depending on each specific case.
3. Note 3: Procedure related to overseas lending
The Lender must submit a dossier to the Foreign Exchange Control Department for consideration and issuance of a written confirmation of registration of overseas lending.
Before performing transfer transactions relating to overseas lending, the Lender must open 01 account for overseas lending at a credit institution that supplies account services in Vietnam. If the economic organization lends to a non-resident that is an overseas enterprise where the Lender contributes capital in the form of direct investment, the account for the overseas lending shall be the account of offshore direct investment capital of the economic organization.
4. Note 4: The Approval issued by the Prime Minister
According to the Ordinance on Foreign Exchange Control 2005, amended and supplemented in 2013, economic organizations are allowed to lend abroad, except for exporting goods and services or for deferred payments to non-residents when permitted by the Prime Minister. Therefore, the Lender must be permitted by the Prime Minister’s Approval to lend overseas.
However, current Vietnamese law does not have specific regulations on the procedures for issuing the Approval so that economic organizations can offer overseas lending. According to our experience, economic organizations can prepare the following documents:
- An application of economic organization requesting approval for foreign lending;
- Legal documents of the economic organization as the Lender and the Borrower;
- Audited financial statements of the economic organization that is the Lender at the time of making the overseas lending;
- The confirmation of fulfillment of tax obligations of the economic organization that is the Lender;
- Lending overseas plan;
- Preliminary agreement, memorandum of understanding or draft agreement with the Borrower on the overseas lending; and
- Other relevant documents, depending on each specific case.
The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at info@blawyersvn.com. BLawyers Vietnam would love to hear from you.
Date: 06 November 2024
Writer: Thai Bui
