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Legal issues should be observant when borrowing Foreign Capital of The Enterprises?

Enterprise 03/08/2023

In business activities, in order to promote and grow the scale of business size, the Enterprise often choose increase the charter capital and the method of raising capital that is quite popularly applied by enterprises is borrowing foreign capital. Although this is a common method for businesses, the scope of loans is expanded not only in the country, but this method also carries a lot of risks that businesses need to be aware of. In this post: Apolo Lawyers (Tel: (+84) 903. 419. 479) will update and clarification legal issues that the Enterprise need to pay attention for businesses when choosing Loan methods.

Legal issues should be observant when borrowing Foreign Loan of The Enterprises?

In business activities, in order to promote and grow the scale of business size, the Enterprise often choose increase the charter capital and the method of raising capital that is quite popularly applied by enterprises is borrowing foreign capital. Although this is a common method for businesses, the scope of loans is expanded not only in the country, but this method also carries a lot of risks that businesses need to be aware of.. In this post: Apolo Lawyers (Tel: (+84) 903. 419. 479) will update and clarification legal issues that the Enterprise need to pay attention for businesses when choosing Loan methods.

1. Loans – What is a foreign loan?

Foreign Loan is a common term used to pay for foreign loans that not guaranteed by the Government (hereinafter referred to as self-borrowing and self-pay loans) and Government-guaranteed foreign loans in all forms. outside through the borrower of the loan contract, deferred goods import contract, loan entrustment contract, financial leasing contract or the issuance of debt instruments on the international market of the borrower.

Legal issues should be observant when borrowing Foreign Loan of The Enterprises?

2. Loan must be registered

Loan Registration Authority: State Bank of Vietnam

Loan must be registered

  • Extended short-term foreign loans with a total loan term of more than one (01) year or not extended but the principal balance is still outstanding after 10 days from the end of the one-year period from the date of initial capital withdrawal. first;
  • Medium and long-term foreign loans.

Mindful:

Borrowing enterprises must prepare and submit loans registration documents to the State Bank of Vietnam within a certain time limit as prescribed by law. In case after registration, when there is a request to change any content related to the loan registered with the State Bank, the loan enterprise must register for loan change within the prescribed time limit. is 30 days from the date of change or receipt of notice of change, except for some other cases where the law requires that the notice is only served to the State Bank without needing to register the change. 

3. Foreign Loan Account – Loan receiving account of the borrowing enterprise:

Loan receiving account of the borrowing enterprise, or Foreign Loan Account, is a payment instrument of the borrowing enterprise opened at a bank providing account services to withdraw capital and repay foreign loans; perform derivative transactions to prevent risks for foreign loans and other money transfer transactions related to foreign borrowing and debt repayment activities, and foreign loan guarantees.

The legal issue that businesses need to pay attention to when creating a Foreign Loan Account is determine which business they belong to in order to comply with the correct order and procedures when opening a Foreign Loan Account, specifically the law on division of labor two objects of enterprises borrowing capital, including enterprises with foreign direct investment capital and enterprises with loans which are not enterprises with foreign direct investment capital.

Enterprises with foreign direct investment capital borrowing capital will be divided according to the type of loan to determine the Foreign Loan Account. For medium and long-term loans, the loan account is the direct investment capital account of the enterprise. For short-term loans, the loan account can also be identified as the direct investment capital account of the enterprise or the loan account of the enterprise used exclusively for the purpose of receiving the loan and repaying the related loan. to short-term foreign loans.

Borrowing enterprises are not foreign direct investment enterprises, regardless of the type of loan, all transactions related to foreign loans must be transferred to the loan account opened by the borrowing enterprise at the bank provide account services.

Legal issues should be observant when borrowing Foreign Loan of The Enterprises?

4. Legal consulting service on foreign loans of enterprises at Apolo Lawyers

Apolo Lawyers is a legal consulting service provider with a team of high quality and professional lawyers and litigation attorneys, ensuring to provide customers with a full package of legal services on foreign loans of enterprises. business quickly and efficiently. For more detailed information, please contact:

Apolo Lawyers Law Firm

Address: 10th Floor, PaxSky Building, No. 51 Nguyen Cu Trinh Street, District 1, Ho Chi Minh City

Tel: (028) 66.701.709 / (028) 35.059.349

Mobile & WhatsApp 1: 0939.486.086 / Mobile & WhatsApp 2: 0908.043.086

Email: contact@apolo.com.vn

Website: www.apolo.com.vn

View more: Procedures for increasing investment capital of foreign - invested companies

View more: Regulations on Investment Registration Certificates

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