• Effective: Effective
  • Effective Date: 01/03/2017
THE GOVERNMENT
Number: 04/2017/ND-CP
SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
Ha Noi , January 16, 2017

DECREE

On the grant and management of government guarantee

__________________

Pursuant to the June 19, 2015 Law on Organization of the Government;

Pursuant to the December 16, 2002 State Budget Law;

Pursuant to the November 26, 2014 Investment Law;

Pursuant to the June 18, 2014 Law on Public Investment;        

Pursuant to the June 16, 2010 Law on Credit Institutions;        

Pursuant to the June 17, 2009 Law on Public Debt Management;

At the proposal of the Minister of Finance, the Government promulgates the Decree on grant and management of government guarantee.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

1. This Decree prescribes the appraisal, approval and grant of government guarantee; the management of government guarantee; responsibilities and obligations of agencies, organizations and individuals in the grant and management of government guarantee for domestic and foreign loans and domestic and international bond issues.

2. The grant and management of government guarantee for the issue of domestic bonds by the policy bank under annual plans assigned by competent agencies are guided in a separate document.

Article 2. Subjects of application

This Decree applies to:

1. The guaranteed.

2. The guarantor.

3. The principal.

4. Agencies, organizations and individuals involved in the grant and management of government guarantee.

Article 3. Interpretation of terms

In addition to the terms defined in the Law on Public Debt Management, in this Decree, the terms below are construed as follows:

1. Targeted credit program of the State means a lending program of a credit institution for national important projects approved by a competent authority.

2. Procedural dossier-receiving representative means an overseas Vietnamese representative mission or an organization authorized to receive and confirm the receipt of procedural dossiers related to government guarantee and to send all those dossiers to the Ministry of Finance.

3. Government guarantee limits include guarantee limits for domestic and foreign loans and bond issues. The annual government guarantee limit means the ceiling level of net loans and net amounts raised from bond issues guaranteed by the Government in a year (the difference between the borrowed amount of money expected to be withdrawn in the year and the principal amount repaid in the year) approved by the Prime Minister.

4. Syndicated loan means a loan jointly granted by two or more financial or credit institutions. A syndicated loan jointly granted by domestic and foreign financial or credit institutions is considered a foreign loan if the total loan amount granted by the foreign institution(s) accounts for 51% or more of the loan value and is subject to relevant regulations on grant and management of government guarantee for government-guaranteed foreign loans.

5. Service bank means the bank where the guaranteed opens a project account and performs tasks related to the supervision of money withdrawal, debt payment and security assets of the project funded with the government-guaranteed loan.

6. Payment obligations means payable amounts, including principal and interest under a contract, late payment interest, charges and expenses, and damages (if any) under a specific loan or bond issue agreement, which are accepted in the letter of guarantee.

7. Guarantor means the Government with the Ministry of Finance acting as the official representative, also referred to as the guarantee-granting agency, as stated in Clause 6, Article 10, and Clause 1, Article 36, of the Law on Public Debt Management.

8. Principal means the party that owns part or the whole of a government-guaranteed loan or bonds. The principal includes the lender, bond buyers and lawful assignees or transferees of the lender or bond buyers, who are collectively referred to as the lender in loan agreements or bond issue agreements.

9. Assignee or transferee of the guaranteed means the party that takes over all or some of the rights and obligations of the guaranteed in a transaction of transfer of a government-guaranteed loan or bond issue, subject to approval by the guarantor.

10. Project account means an account opened by the guaranteed at a service bank and registered in writing with the State Bank of Vietnam and the Ministry of Finance. The project account shall be used for performance of transactions related to government-guaranteed loans or amounts raised from issued bonds, for receipt of contributed capital, turnover and other incomes and for payment of debts of a program or project from the time the Government issues a letter of guarantee.

Article 4. Forms of guarantee document

1. Government guarantee may be provided in the form of letter of guarantee, guarantee contract or guarantee document (below collectively referred to as letter of guarantee).

2. The Government shall only grant letters of guarantee, but not letters of re-guarantee.

Article 5. Subjects, programs and projects to be considered for grant of government guarantee

1. Subjects eligible for grant of government guarantee must comply with Article 32 of the Law on Public Debt Management, and satisfy the conditions specified in this Decree.

2. The Prime Minister shall specify programs and projects prioritized for grant of government guarantee in each period in accordance with Article 33 of the Law on Public Debt Management.

Article 6. Formulation of plans to request medium-term government guarantee

1. Subjects defined in Clause 1, Article 5 of this Decree shall base on their demands for loans or bond issues to formulate plans to request medium-term guarantee for a period of three years, including the year in which the plans are formulated and subsequent 2 years, by the successive method and send them to the Ministry of Finance in January of the plan-formulating year.

2. A plan to request medium-term guarantee formulated by a subject defined in Clause 1 of this Article must contain the following principal contents:

a/ Name of the project or program;

b/ Value of the loan for each project;

c/ Forms of borrowing (loan, bond issue, domestic and foreign);

d/ Projected loan term and implementation period.

3. Based on the plans to request medium-term guarantee of subjects defined in Clauses 1 and 2 of this Article and the system of public debt and national foreign debt monitoring indicators, the Ministry of Finance shall elaborate plans on grant of medium-term government guarantee and include them in the Government’s medium-term debt management program.

Article 7. Formulation of annual plans on grant of government guarantee

1. Subjects approved by a competent authority for grant of government guarantee under Article 12 of this Decree and requesting government guarantee in a year shall send their written registrations to the Ministry of Finance (and copies thereof to the State Bank of Vietnam for foreign loans or bonds to be issued overseas) in October of the preceding year at the latest.

2. An annual plan to request government guarantee must contain the following principal contents:

a/ Name of the investment program or project;

b/ Value of the loan or bond issue in need of government guarantee;

c/ Reference number and date of the written approval of the government guarantee grant policy;

d/ Amount of money expected to be withdrawn in the year if the government guarantee is granted.

3. In case of a need to adjust the registered government guarantee plan in the year, a subject shall send a written request to the Ministry of Finance, clearly stating the reason for the adjustment.

Article 8. Government guarantee limits

1. The loan and bond issue guarantee limits lie within the loan and debt payment limits of the Government. Based on plans to request medium-term guarantee, approved guarantee grant policy and written registrations of guarantee grant plans in a year, the Ministry of Finance shall elaborate annual government guarantee grant plans and submit them to the Prime Minister for approval in accordance with the Law on Public Debt Management.

2. Within the government guarantee limit approved annually, the Ministry of Finance shall grant government guarantee under the Prime Minister’s decision for each loan or bond issue.

3. If the approved annual government guarantee limit of a year is used up but government guarantee is still requested for urgent projects or works of special importance for national socio-economic development with investment policy already decided by the National Assembly or the Government, which require government-guaranteed loans, the Ministry of Finance shall propose the adjustment of the government guarantee limit of that year to the Prime Minister for decision, provided that public debt safety must be ensured.

Article 9. Conditions for grant of government guarantee

In addition to the conditions specified in Article 34 of the Law on Public Debt Management, the conditions for grant of government guarantee in some cases are prescribed as follows:

1. For investment programs and projects:

a/ Regarding borrowers and bond issuers:

- Borrowers or bond issuers are enterprises with the legal person status, lawfully established in Vietnam and having operated for at least 3 years.

- Enterprises carrying out investment projects contribute equity capital accounting for at least 20% of the total investment capital of the projects. The equity capital must be allocated according to the project implementation schedule.

For cases in which this condition is exempted by the Prime Minister under Point e, Clause 2, Article 34 of the Law on Public Debt Management, the project owners shall still ensure contributed equity capital accounting for at least 15% of the total investment amount of the projects.

- Enterprises carrying out investment programs or projects have a sound financial status without accumulated losses (excluding losses incurred due to the State policy) and ensure the ratio of debts to equity capital not exceeding three times according to the audited financial statement of the year nearest to the time of appraisal for grant of government guarantee.

- Having a commitment of the parent company (for enterprises operating after the parent company-subsidiary company model) or of the group of shareholders or organizations and individuals contributing equity capital accounting for 65% or more of the enterprise’s investment capital to pay debts for the guaranteed in case the latter meets with difficulties in debt payment.

b/ Regarding investment programs and projects:

- Having obtained approval of government guarantee grant policy by a competent authority.

- Having the guarantee grant plan for loans or bond issues registered in the plan year under Article 7 of this Decree, which lies within the government guarantee limit approved by the Prime Minister as prescribed in Article 8 of this Decree.

- Having a feasible financial plan and the average debt payment coefficient of at least 0.9 in the first 5 years of the project, for projects with offtake agreements, or of 1, for other projects.

- For projects referred to at Point c, Clause 2, Article 10 of this Decree, the project owner must buy payment insurance for 100% of the debt payment obligation in case the project’s operation does not generate sufficient revenues for debt payment.

2. For targeted credit programs of the State:

a/ Borrowers or bond issuers are credit institutions that are lawfully established in Vietnam and have the legal person status in accordance with Vietnamese law.

b/ Loans or funds raised from bond issues are used for carrying out targeted credit programs of the State suitable to the organization and operation charters of such credit institutions.

c/ Having obtained approval of government guarantee grant policy by a competent authority.

d/ Loans or bond issues proposed for guarantee grant have been registered in the guarantee grant plan in the plan year as prescribed in Article 7 of this Decree and  within the Prime Minister-approved government guarantee limit as prescribed in  Article 8 of this Decree.

dd/ Credit institutions must ensure the safety ratios in their operation as prescribed by the State Bank of Vietnam and are not subject to special control.

Article 10. Government guarantee levels

1. The government guarantee level for the value of the principal of a loan or bond issue for an investment program or project must not exceed 70% of the total investment amount of the program or project.

2. The government guarantee level applicable to each specific program or project under Investment Law No. 67/2014/QH13 of November 26, 2014, and Public Investment Law No. 49/2014/QH13 of June 18, 2014, is prescribed as follows:

a/ For a project with investment policy approved by the National Assembly or the Government or a project to be urgently carried out, the guarantee level is the value of the principal of the loan or bond issue not exceeding 70% of the total investment amount stated in the investment decision;

b/ For a group-A project with a total investment amount of VND 2,300 billion or more and with investment policy approved by the Prime Minister, the guarantee level is the value of the principal of the loan or bond issue not exceeding 60% of the total investment amount stated in the investment decision;

c/ For other projects, the guarantee level is the value of the principal of the loan or bond issue not exceeding 50% of the total investment amount stated in the investment decision.

Article 11. Letter of guarantee

1. Letters of guarantee shall be issued and managed by the Ministry of Finance.

2. A letter of guarantee shall be issued only once for every loan or bond issue for a program or project and the guaranteed amount stated in the letter must not exceed the projected total guarantee level for the loan or bond issue already approved by the Prime Minister for such program or project.

3. The compulsory contents of a letter of guarantee include:

a/ The guarantor;

b/ The guaranteed;

c/ Reference to relevant commercial contracts and loan agreements;

d/ The guaranteed loan amount, the guaranteed currency;

dd/ The Ministry of Finance’s commitment to the principal regarding the obligations of the guaranteed and the Ministry of Finance;

e/ Benefits and responsibilities of the principal;

g/ The validity and withdrawal of the letter of guarantee;

h/ The governing law and bodies, locations and languages used in the settlement of disputes;

i/ Place and date of issue of the letter of guarantee.

4. Other contents of a letter of guarantee may be agreed upon by the concerned parties, which must, however, not be contrary to Vietnamese law.

5. A letter of guarantee takes effect from the date of issue to the date the guaranteed or the guarantor fulfills the guaranteed payment obligations to the principal under the conditions stated in the loan agreement or the terms and conditions of the government-guaranteed bond.

Chapter II

APPRAISAL, APPROVAL AND GRANT OF GOVERNMENT GUARANTEE

Section 1

CONSIDERATION AND APPROVAL OF GOVERNMENT GUARANTEE GRANT POLICY

Article 12. Approval of government guarantee grant policy

1. The Government shall approve the policy to grant government guarantee for:

a/ Investment programs and projects falling under the investment policy-deciding competence of the National Assembly or the Government as prescribed in the Investment Law and Public Investment Law;

b/ Projects not using state budget funds but requesting government guarantee for a loan or bond issue valued at USD 300 million or more;

c/ Projects carried out by enterprises with over 30% of the charter capital contributed by foreign investors or foreign-invested economic organizations.

2. The Prime Minister shall approve the policy to grant government guarantee for programs and projects other than those specified in Clause 1 of this Article.

3. Within 3 years after obtaining approval of government guarantee policy, the party requesting government guarantee shall finalize the dossier of request for government guarantee and submit it to the Ministry of Finance. Past this time limit, the government guarantee policy will no longer be valid for consideration of guarantee grant.

4. Approval of government guarantee policy serves as a basis for enterprises and credit institutions to negotiate with lenders but does not guarantee the grant of government guarantee if the conditions specified in Articles 9, 15 and 20 of this Decree are not met at the time of consideration of guarantee grant.

Article 13. Dossiers of request for approval of government guarantee grant policy

An enterprise or a credit institution requesting approval of government guarantee grant policy shall submit to the Ministry of Finance directly or by post the following documents:

1. A written request for approval of government guarantee grant policy, made by the enterprise or credit institution (original).

2. The establishment decision of the enterprise or credit institution or business registration certificate of the enterprise being the program or project owner (certified copy).

3. Relevant investment documents (certified copies):

a/ The investment policy decision enclosed with the prefeasibility study report, or the investment decision enclosed with the pre-feasibility report of the project already approved by a competent authority; or

b/ The investment registration certificate (if any); or

c/ The decision approving the targeted credit program of the State, for credit institutions.

4. A report of the enterprise or credit institution on its operation and the program or project in need of the loan (original), stating:

a/ The general operation status of the enterprise (with a list of shareholders and individuals contributing 5% or more of the charter capital of the enterprise) or credit institution and its operation in the field covered by the program or project in need of guarantee;

b/ Capital sources of the program or project (clearly stating the specific money amount of each source: equity capital, loan or bond issue and ratio of each capital source); equity capital contribution schedule;

c/ Purpose of the loan or bond issue (clarifying whether the loan will be used to directly serve production and business operation of the borrower or transferred to subsidiaries/joint-venture or partnership companies for use);

d/ Projected time of borrowing or bond issue (time of starting the payment of principal and interest), the time of money withdrawal and project implementation;

dd/ The plan on use and management of the loan or amount raised from the bond issue;

e/ The plan on arrangement of capital sources for payment of principal, interest and charges when due, including sources from the project’s operation and provisions for debt payment (if any);

g/ The plan on asset mortgage for the government-guaranteed loan or bond issue.

5. The plan on arrangement of equity capital in the total investment amount of the project, plans on annual allocation of equity capital in the construction period and evidence proving the equity capital allocation capability.

6. The audited financial statements (certified copies) of three consecutive years preceding the time of sending the dossier for appraisal:

a/ Those of the enterprise or credit institution requesting approval of guarantee grant policy;

b/ Those of the parent company of the enterprise requesting the grant of guarantee or of shareholders or capital contributors (excluding shareholders or capital contributors being individuals) that own at least 5% of the enterprise’s equity capital in case the enterprise is newly set up (less than 3 years in operation) or no revenues have been generated yet from its production and business activities. If the dossier is submitted in the second half of the fiscal year, the financial statement of the first half of the year shall be added.

Article 14. Order and procedures for considering and approving government guarantee grant policy

1. The Ministry of Finance shall consider dossiers requesting approval of government guarantee grant policy after the enterprises have provided all documents specified in Article 13 of this Decree and before negotiations on the agreement on the loan in need of government guarantee.

2. Within 30 days after receiving a complete dossier of request for consideration and approval of guarantee grant policy from a borrower or bond issuer under this Decree, the Ministry of Finance shall check the dossier in terms of:

a/ Its validity;

b/ Satisfaction of the conditions on the borrower, program or project specified in Articles 32 and 33 of the Law on Public Debt Management and of the conditions for each type of loan prescribed by this Decree;

c/ Satisfaction of the conditions for grant of government guarantee applicable to borrowers or bond issuers specified in Clause 2 of Article 34 and relevant conditions on the loan or bond issue prescribed in Clause 3, Article 34 of the Law on Public Debt Management.

In case the dossier fails to meet the conditions specified in this Clause, the Ministry of Finance shall notify the borrower or bond issuer thereof.

3. If it is necessary to add information in the appraisal process, the Ministry of Finance shall consult ministries, ministerial-level agencies and sector-managing agencies on matters under their respective management which are related to programs and projects in need of loans proposed for grant of government guarantee.

4. The Ministry of Finance shall report to the Government or Prime Minister (according to the investment policy-deciding competence) on results of appraisal of guarantee grant policy and propose the approval or disapproval of the government guarantee grant policy.

5. The Government or Prime Minister shall issue written approvals or disapprovals of the government guarantee grant policy according to the competence prescribed in Clauses 1 and 2, Article 12 of this Decree and send them to related agencies.

Section 2

GRANT OF GOVERNMENT GUARANTEE FOR DOMESTIC AND FOREIGN LOANS

Article 15. Dossiers of request for approval of government guarantee grant for loans

In addition to the dossier sent under Article 13 of this Decree, a borrower shall send to the Ministry of Finance directly or by post the following documents to request approval of the grant of government guarantee for a loan:

1. A written request for government guarantee, made by the lender to the borrower (original);

2. The enterprise’s or credit institution’s written request for government guarantee grant, enclosed with the suggestion of the service bank for the government-guaranteed loan (original).

3. The documents prescribed in Article 13 if there is any adjustment to the previously submitted documents.

4. The feasibility study report approved by a competent authority (in case only the prefeasibility study report was submitted to the Ministry of Finance for appraisal of guarantee granting policy) (certified copy).

5. The competent authority’s written approval of guarantee grant policy (certified copy).

6. The borrowing plan (original), which is updated within 6 months before submitting the dossier of request for approval of government guarantee grant, containing the contents specified in Clause 4, Article 13 of this Decree and also the following:

a/ A summary of the conditions of the loan proposed for guarantee and other loans (if any);

b/ The plan on quarterly withdrawal of money from the loan.

7. The written approval of the government-guaranteed loan plan, issued by the agency representing the state capital owner at the organization if it is an enterprise, a credit institution or policy bank with state-contributed capital accounting for 50% or more (original).

8. The final draft loan agreement initialed by the parties or the concluded loan agreement, which requires government guarantee (certified copy).

9. The financial statements of three consecutive years preceding the time of sending the dossier for appraisal of the guarantee grant, already audited under Clause 5, Article 13 of this Decree (certified copies). The financial statement of the first half of the year if the request for guarantee grant is made in the second half of the fiscal year.

10. A detailed report of the National Credit Information Center of the State Bank of Vietnam on the credit status of the borrower (original).

11. The written commitment as prescribed in Appendix II to this Decree (original), enclosed with the confirmation of a competent representative of the parent company or organizations and individuals contributing 65% or more of the charter capital to pay debts in case the guaranteed meets with difficulties in debt payment.

12. The written commitment of organizations and individuals each owning stocks or contributed capital representing 5% or more of the actually contributed charter capital to jointly hold at least 65% of the actually contributed charter capital throughout the effective period of the guarantee, enclosed with a list of these shareholders and individuals (for joint-stock companies).

13. Added information, if any, that arises in the course of appraising the grant of guarantee for a loan for an investment project (approved base design, offtake contract, description of technology and equipment of the project).

14. A plan on annual arrangement of equity capital according to the dossier proving the capability to arrange equity capital (if any).

The borrower shall send to the Ministry of Finance all the documents specified in Article 13 and the documents specified in this Article before the appraisal of guarantee grant is performed.

Article 16. Appraisal of government guarantee grant for loans

1. Within 30 days after receiving all the documents to request guarantee grant as prescribed by this Decree from a borrower, the Ministry of Finance shall appraise these documents and report to the Prime Minister on the appraisal result with the following principal contents:

a/ The validity of the provided documents;

b/ Assessment of the enterprise, financial or credit institution, program or project and the loan to be guaranteed against the criteria and conditions prescribed in Articles 32, 33 and 34 of the Law on Public Debt Management and the conditions on the loan;

c/ Assessment of the financial status of the enterprise, financial or credit institution that borrows the loan in need of government guarantee;

d/ Assessment of the financial plan of the loan-funded program or project and the enterprise’s debt payment capability, except for cases in which a competent authority permits the use of the previous appraisal result already approved by a competent authority. The appraisal method is detailed in Appendix I to this Decree;

dd/ Assessment of the conformity (of the type, characteristic, value...) of the asset to be mortgaged for the loan or bond issue in need of government guarantee;

e/ Assessment of risks of the program or project related to the loan to be guaranteed by the Government;

g/ The total amount of loans and the number of projects guaranteed by the Government and carried out by the enterprise or credit institution by the time of appraisal; outstanding government-guaranteed loans of the enterprise or credit institution by the time of appraisal;

h/ The proposed guarantee charge rate;

i/ Suggestions and proposals.

2. If the documents fail to satisfy the conditions prescribed in Clause 1 of this Article, the Ministry of Finance shall notify the borrower thereof within 5 working days after the appraisal is completed.

3. If needing additional information in the course of appraisal, the Ministry of Finance shall consult ministries, ministerial-level agencies and sector-managing agencies on matters under their respective management which are related to the program or project to be funded with the loan proposed for grant of government guarantee.

Article 17. Decisions on grant of government guarantee for loans

1. The Ministry of Finance shall submit to the Prime Minister contents of letters of guarantee together with reports on results of government guarantee grant appraisal.

2. A decision on grant of government guarantee for a loan issued by the Prime Minister must:

a/ Approve contents of the letter of guarantee and assigning the Ministry of Finance to issue the letter of guarantee;

b/ Approve the government guarantee charge rate applicable to the loan;

c/ Assign the Ministry of Justice to issue legal opinions under law (if any);

d/ Assign the Ministry of Foreign Affairs to coordinate with the Ministry of Finance in appointing an overseas Vietnamese representative mission to receive the procedural dossier according to the letter of guarantee;

dd/ Approve another organization to act as representative to receive the procedural dossier according to the letter of guarantee;

e/ Other contents.

Article 18. Issue of letters of guarantee for loans

1. A letter of guarantee shall be issued by the Ministry of Finance on the basis of the Prime Minister’s decision approving the grant of government guarantee for a loan and after the guaranteed has completed the following procedures:

a/ Signing with the Ministry of Finance a contract on asset mortgage for the government-guaranteed loan;

b/ Opening a project account at the service bank; notifying the Ministry of Finance in writing of the numbers of this account and all existing deposit accounts at various credit institutions, enclosed with certifications of these credit institutions (original) or the contract on opening the project account;

c/ Submitting to the Ministry of Finance the loan contract officially signed by concerned parties (certified copy).

2. A letter of guarantee shall be issued within 7 working days after the completion of the procedures specified in Clause 1 of this Article:

a/ For a foreign loan, a letter of guarantee shall be made in 4 originals, of which 1 shall be filed by the Ministry of Finance, 1 kept by the guaranteed, 1 by the Ministry of Justice and 1 sent to the lender or the lender’s representative;

b/ For a domestic loan, a letter of guarantee shall be made in 6 originals, of which 2 shall be filed by the Ministry of Finance, 1 by the guaranteed, 1 sent to the lender and 2 sent to related agencies.

3. The Ministry of Finance may decide to issue additional originals to related agencies other than those defined in Clause 2 of this Article on a case-by-case basis, if necessary.

Article 19. Procedures related to the effect of government-guaranteed foreign loans

1. The guaranteed shall carry out the procedures stated in the loan agreements so that the letters of guarantee and loan agreements take full effect.

2. The guaranteed shall work with the Ministry of Justice for the issue of legal opinions on the letters of guarantee for government-guaranteed foreign loans.

3. After the letters of guarantee are issued, the guaranteed shall register its foreign loans with the State Bank of Vietnam according to Clause 1, Article 35 of the Law on Public Debt Management and the latter’s regulations on management of borrowing and payment of foreign loans.

4. If the procedural proceedings stated in the foreign loan agreement and the letter of guarantee require a representative to receive the procedural dossier:

a/ The guaranteed shall propose to the Ministry of Finance the organization to be selected to act as a representative to receive the procedural dossier for the borrower and the guarantor as required by the loan agreement and to consult the Ministry of Finance and the Ministry of Foreign Affairs in the course of negotiation;

b/ After the loan agreement is concluded and the government guarantee is granted, the guaranteed shall send the forms of power of attorney of the lender and the guarantor (if any) to the organization selected to receive the procedural dossier to sign and send them to the guaranteed for further transfer to the principal and sending of the copies thereof to the Ministry of Finance.

Section 3

GRANT OF GOVERNMENT GUARANTEE FOR DOMESTIC AND INTERNATIONAL BOND ISSUES OF ENTERPRISES

Article 20. Dossiers of request for grant of government guarantee for bond issues

In addition to the dossier already sent under Article 13 of this Decree, a bond issuer requesting the grant of government guarantee shall additionally submit to the Ministry of Finance the following documents:

1. The documents prescribed in Article 13 if there is any adjustment as compared to the previously submitted documents.

2. The bond issuer’s written request for government guarantee together with the service bank’s suggestion on the bond issue to be guaranteed by the Government (originals).

3. The project’s feasibility study report already approved by a competent authority (in case only the prefeasibility study report was submitted to the Ministry of Finance for appraisal of guarantee grant policy) (certified copy) (if any).

4. A competent authority’s written approval of guarantee grant policy (certified copy).

5. The bond issue plan (original), which is updated within 6 months before the submission of the dossier of request for approval of government guarantee grant according to the contents prescribed in Clause 4, Article 13 of this Decree, together with:

a/ The bond issue plan and time and the implementation and disbursement plans of the program or project (originals or certified copies);

b/ The total bond volume divided by bond term and time of issue based on the implementation and disbursement schedules of the program or project;

c/ The projected currency and markets in which the bond will be issued, interest rate and bond-issuing method (if any);

d/ The projected method of selecting organizations or syndicates providing guarantee for the bond issue, domestic legal consultants, international legal consultants and related agents (if any).

If the projected issue is divided into different tranches over many years, the issue plan shall be detailed by year.

6. The written approval of the government-guaranteed bond issue plan, made by the agency representing the owner of state capital at the organization if it is an enterprise, a credit institution or a policy bank with 100% state-contributed capital (original); or opinion of the owner-representing agency if the enterprise or credit institution has state-contributed capital of under 100%.

7. The financial statements of 3 consecutive years preceding the time of appraisal of government guarantee grant, already audited as prescribed in Clause 5, Article 13 of this Decree (certified copies). If the dossier of request for government-guarantee bond issue is submitted before April 1, financial statements as prescribed at Point b, Clause 1, Article 13 of Decree No. 90/2011/ND-CP on issue of corporate bonds and relevant amending, supplementing or replacing documents, are required.

8. A detailed report of the National Credit Information Center of the State Bank of Vietnam on the credit status of the bond issuer (original).

9. The written commitment as prescribed in Appendix II to this Decree (original), enclosed with the confirmation of a competent representative of the parent company or organizations and individuals contributing 65% or more of the charter capital to guarantee the debt payment if the guaranteed meets with difficulties in debt payment.

10. Written commitments of organizations and individuals each owning stocks or contributed capital accounting for 5% or more of the actually contributed charter capital to jointly hold at least 65% of the actually contributed charter capital throughout the effective guarantee period, enclosed with a list of these shareholders and individuals (for joint-stock companies).

11. Supplemented information if arising in the process of appraising the grant of guarantee for the loan for an investment project (approved base design, offtake contract, description of technologies and equipment of the project).

12. The plan on annual arrangement of equity capital for the investment project, enclosed with dossiers proving the capability to arrange equity capital (if any).

The bond issuer shall send to the Ministry of Finance all the dossier prescribed in Article 13 and the documents specified in this Article before the appraisal of guarantee grant.

Article 21. Government guarantee appraisal and grant

1. The Ministry of Finance shall appraise the dossiers of request for grant of guarantee for domestic or international bond issues according to the contents and procedures applicable to government-guaranteed domestic and foreign loans prescribed in Article 16 of this Decree. The Ministry of Finance shall submit to the Prime Minister contents of letters of guarantee together with reports on results of appraisal of government guarantee grant.

2. After the Prime Minister issues a decision on grant of government guarantee according to the contents prescribed in Article 17 of this Decree and approves the guarantee grant limit, the Ministry of Finance shall notify in writing the bond issuer thereof for organization of the bond issue under the approved plan.

3. Enterprises shall organize bond issues in accordance with the law on issue of corporate bonds. The issue of bonds to the public must comply with the law on securities.

4. Upon the conclusion of each bond issue tranche, the bond issuer shall report on the issue result to the Ministry of Finance for carrying out the procedures to certify the actual guarantee obligation in accordance with the law on grant and management of government guarantee,

Article 22. Issue of letters of guarantee for domestic and international bond issues

1. Letters of guarantee shall be issued by the Ministry of Finance on the basis of the Prime Minister’s decisions on grant of government guarantee for bond issues after the guaranteed completes the following procedures:

a/ Signing with the Ministry of Finance a contract on asset mortgage for the government-guaranteed bond issue as prescribed in Article 32 of this Decree;

b/ Opening a project account at the service bank, notifying the numbers of this account and all existing deposit accounts at various credit institutions, with certifications of these credit institutions, to the Ministry of Finance (if there is a specific project to be funded with the loan);

c/ Submitting to the Ministry of Finance bond trading contracts signed by the parties (certified copies) (if any).

2. A letter of guarantee shall be issued within 5 working days after the procedures prescribed in Clause 1 of this Article are completed:

a/ For international bond issues, a letter of guarantee shall be made in 4 originals, of which 1 shall be filed by the Ministry of Finance, 1 kept by the guaranteed, 1 kept by the Ministry of Justice, and 1 delivered to the financial agent;

b/ For domestic bond issue, a letter of guarantee shall be made in 6 originals, of which 2 shall be filed by the Ministry of Finance, 1 kept by the guaranteed, 1 delivered to the distribution agent, and 2 sent to related agencies.

3. The Ministry of Finance shall decide on the issue of additional originals to related agencies other than those specified in Clause 2 of this Article on a case- by-case basis if necessary.

Article 23. Procedures related to the effect of government-guaranteed international bond issues

1. The guaranteed shall carry out the procedures prescribed in the international bond issue agreements so that the letters of guarantee and the international bond issue agreements take full effect.

2. The guaranteed shall work with the Ministry of Justice for the latter to issue legal opinions on the letters of guarantee for the government-guaranteed international bond issue.

3. After the letter of guarantee is issued, the guaranteed shall register the international bond issue with the State Bank of Vietnam according to Clause 1, Article 35 of the Law on Public Debt Management and the regulations of the State Bank of Vietnam on management of the borrowing and payment of foreign loan by enterprises.

4. If the procedures stated in the international bond issue agreement and the letter of guarantee require a representative to receive the procedural dossier:

a/ The guaranteed shall propose to the Ministry of Finance the organization to be selected as a representative to receive the procedural dossier for the lender and the guarantor as required by the bond issue agreement and consult the Ministry of Finance and the Ministry of Foreign Affairs in the course of negotiations;

b/ After the bond issue agreement is concluded and the letter of guarantee is issued, the guaranteed shall send the forms of power of attorney of the lender and the guarantor (if any) for the organization selected as a representative to receive the procedural dossier to sign and send them to the guaranteed for further sending to the principal and the copies thereof to the Ministry of Finance.

Chapter III

MANAGEMENT OF GOVERNMENT GUARANTEE

Section 1

MANAGEMENT OF GOVERNMENT-GUARANTEED LOANS

Article 24. Service banks

1. Having a service bank is compulsory for investment projects, which shall be selected and proposed in the dossier of request for grant of government guarantee.

2. Service banks must be commercial banks established and operating under Vietnam’s Law on Credit Institutions and satisfy the following conditions:

a/ Being on the list of commercial banks qualified to act as service banks for ODA projects and concessional loans of the State Bank of Vietnam; or

b/ Being rated by one of three international credit rating agencies (Moody’s, Standard and Poor’s and Fitch) as being equivalent to or one level lower than the national credit rating.

3. Responsibilities of a service bank:

a/ To make payment from, monitor and supervise the project accounts, withdrawal of loan money and debt payment and security assets of the guaranteed loans or bond issues, and take responsibility for the accuracy of certification reports issued by the service bank;

b/ To control money withdrawal dossiers and documents of the guaranteed in terms of their conformity with the signed commercial contracts and loan agreements; to send them to the guaranteed and the Ministry of Finance for certification of the conformity within 5 days after receiving disbursement dossiers of the guaranteed and before the guaranteed sends withdrawal dossiers to the lender;

c/ To report to the Ministry of Finance on the causes and solutions in case money withdrawal dossiers and documents are unconformable;

d/ To supervise the project account’s balance and report to the Ministry of Finance on the implementation of the guaranteed’s commitment biannually or extraordinarily when the guaranteed fails to implement its commitment; to make debt payments from the project account at the request of the Ministry of Finance in case the guaranteed fails to fulfill its debt payment obligations;

dd/ To be paid service charges by the guaranteed under the regulations of the service bank and their mutual agreement.

4. Order and procedures for approving a service bank:

a/ After the government guarantee grant is approved by a competent authority, the guaranteed shall register its service bank with the Ministry of Finance.

A registration dossier must comprise:

- The guaranteed’s written request for selection of the service bank (original);

- The contract between the guaranteed and the service bank, clearly stating the responsibilities and obligations of concerned parties (in conformity with this Decree’s provisions on responsibilities of the guaranteed and the service bank) (original or certified copy);

- Documents proving that the service bank fully meets the conditions specified in Clause 2 of this Article (official documents or certified copies thereof).

b/ The Ministry of Finance shall give written approval or rejection (with reasons) of the guaranteed’s request within 7 working days;

In case its request is declined, the guaranteed shall select another service bank fully satisfying the conditions specified in Clause 2 of this Article and request the Ministry of Finance to consider and approve it;

c/ If the guaranteed cannot select a service bank, the Ministry of Finance shall appoint a service bank after consulting with the guaranteed.

Article 25. Project account

1. The guaranteed implementing an investment project funded with a government-guaranteed loan shall open a project account at the service bank, excluding credit institutions implementing the State’s targeted credit programs funded with government-guaranteed loans.

2. The project account reflects the borrowing and payment of a loan (principal, interest and charges), revenues and expenditures related to the project and other lawful capital sources of the guaranteed to ensure full payment of arising debts.

3. In case of change or re-registration of its project account, the guaranteed shall report the reason therefor in writing to the Ministry of Finance.

Article 26. Provisions on withdrawal of money from government-guaranteed loans and amounts raised from bond issues

1. The guaranteed shall issue bonds, withdraw money and use government-guaranteed loans and contribute or arrange equity capital in accordance with the borrowing plans or bond issue plans approved by the agency representing the owner of state capital (for state enterprises) or a competent agency, in conformity with the implementation schedule and plans registered with the Ministry of Finance, and in conformity with loan agreements and commercial contracts.

2. The lender shall examine money withdrawal dossiers and documents against the loan use purpose before permitting the disbursement of the government-guaranteed loan and transfer the payment money at the request of the borrower (the guaranteed).

3. The service bank shall examine dossiers and money withdrawal documents against the loan use purpose, loan agreement and commercial contract already signed before the guaranteed withdraws money from the account of the lender, and withdraw money or transfer the payment money from the project account at the request of the guaranteed.

Article 27. Provisions on management of loans, amounts raised from bond issues and other received capital amounts

1. The guaranteed shall:

a/ Manage and use loans, contributed capital and equity capital for the purposes stated in the borrowing or bond issue plans;

b/ Make timely and full accounting in accordance with law for government-guaranteed loans and amounts raised from bond issues;

c/ Prioritize the use of revenues collected into the project account to pay government-guaranteed loans and loans from the debt payment accumulation fund, and to pay related debts of the project (if any);

d/ Commit to transfer revenues and other lawful incomes to the project account immediately after they arise from the project in order to ensure full and on-time payment of debts;

dd/ Commit to maintain the balance in the project account (in the original currency or in Vietnam dong according to the exchange rate applied by the service bank) right in the first year when debt payment obligations arise in order to ensure on-time payment of debts. The minimum balance shall be calculated according to the formula stated in Appendix IV to this Decree and must be equal to the following period’s payable debt and available 15 days before the maturity date;

e/ Issue an unconditional and irrevocable power of attorney to the service bank for the latter to request the credit institutions where the guaranteed opens its deposit accounts to deduct money from such accounts in order to ensure the balance for debt payment; at the same time to issue irrevocable powers of attorney to these credit institutions for them to deduct money from its accounts for transfer to the service bank;

g/ Compare debts biannually and annually with the Ministry of Finance or send to the Ministry of Finance copies of biannual and annual debt comparison reports with the lending banks concerning the government-guaranteed loan or amounts raised from government-guaranteed bond issues.

2. The Ministry of Finance shall:

a/ Monitor the money withdrawal and debt payment by the guaranteed for the government-guaranteed loan and record data thereon in the Ministry’s debt management system;

b/ Compare biannually and annually the outstanding amount of the guaranteed loan with the guaranteed and annually with the principal.

3. The service bank shall:

a/ Perform its tasks throughout the course of money withdrawal and debt payment of the project;

b/ Report to the Ministry of Finance once every six months on the balance and revenues and expenditures on the project account or other accounts related to the money withdrawal and debt payment by the guaranteed (if any);

c/ If the project account balance is smaller than the committed level, to request the guaranteed to transfer money for increasing this balance and report thereon to the Ministry of Finance.

Article 28. Modification of letters of guarantee

1. The Ministry of Finance shall modify the letter of guarantee for a signed loan agreement at the request of the guaranteed upon receiving a complete and valid dossier as follows:

a/ The guaranteed’s written request clearly explaining the reasons for and contents of the letter of guarantee to be modified and the impacts of the modification on the performance of obligations of the guaranteed under the loan agreement;

b/ Written amendments to the loan agreement;

c/ Written draft modifications to the letter of guarantee as proposed by the principal (if any).

2. If the modified contents of the letter of guarantee for a signed loan agreement will not result in an increase in the total government-guaranteed loan principal and replacement of the guaranteed, the Prime Minister shall authorize the Minister of Finance to decide and issue a document or an annex of modification to the letter of guarantee within 15 days after receiving a complete and valid dossier prescribed in Clause 1 of this Article from the principal.

3. If the modified contents of the letter of guarantee for a signed loan agreement will result in an increase in the total government-guaranteed loan principal or replacement of the guaranteed, the Ministry of Finance shall submit them to the Prime Minister for decision before issuing a document or an annex of modification to the letter of guarantee.

Section 2

COLLECTION AND USE OF GUARANTEE CHARGES

Article 29. Government-guarantee charge

1. The government-guarantee charge shall be determined by the Ministry of Finance on the basis of the result of appraising the financial plan of the program or project, the financial status of the enterprise or credit institution, depending on risk level, which, however, must not exceed 2%/year on the guaranteed outstanding loan.

2. The government-guarantee charge rate is the total of two charges:

a/ Calculated according to the average debt payment coefficient of the first 5 years of the project and according to the financial capability coefficient of the enterprise requesting the grant of government guarantee at the time of appraisal for government guarantee grant for loans and bond issues for investment projects;

b/ Calculated according to the minimum capital safety ratio of the credit institution requesting the grant of government guarantee for loans and bond issues of credit institutions.

3. Government-guarantee charge rates are specified in the government guarantee charge tariff in Appendix III to this Decree.

4. The minimum charge rate of the average debt payment coefficient of the first 5 years of the project and the charge rate corresponding to the financial capability coefficient of the enterprise in the government-guarantee charge tariff shall be applied to cases of non-reappraisal of the financial plan prescribed at Point d, Clause 1, Article 16 of this Decree.

5. The Government shall decide on the exemption from government guarantee charge for government-guaranteed loans or bond issues for implementation of special programs or projects with investment policy decided by the National Assembly, the Government or the Prime Minister.

Article 30. Government-guarantee charge collection and payment

1. The government-guarantee charge shall be calculated on the basis of the outstanding principal of the loan or amount raised from issued bonds and the loan currency at the government guarantee charge rate approved by the Prime Minister, starting from the first day of money withdrawal or the day of bond purchase payment.

2. The government-guarantee charge shall be calculated in the loan currency and collected in Vietnam dong at the selling exchange rate officially announced by the Joint-Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) at the time of guarantee charge payment and paid to the debt payment accumulation fund on the day of payment of interest on the government-guaranteed loan or issued bond.

3. Within 10 days after the maturity date prescribed in Clause 2 of this Article, if the Ministry of Finance does not receive the payable charge, the guaranteed will be subject to interest on the late paid government guarantee charge which shall be:

a/ Calculated on the number of late payment days from the maturity date to the actual payment date;

b/ The interest rate applicable to the late paid government guarantee charge is equal to the interest rate of the government-guaranteed loan or bond issued;

c/ If the interest rate of the loan or issued bond is a floating one, the Ministry of Finance may apply the reference interest rate of the same interest payment period of the government-guaranteed loan or issued bond for calculation of late payment interest.

Article 31. Use of government-guarantee charge

1. The government-guarantee charge constitutes a source of revenue of the debt payment accumulation fund and shall be managed by the fund and used for creation of sources for the fund, including the performance of obligations of the guaranteed.

2. The Ministry of Finance may deduct 1.5% of the total actually collected charge amount for use for government guarantee grant and management activities according to the contents permitted by the Prime Minister.

If it is necessary to consult independent organizations and specialists on the grant of government guarantee, the Minister of Finance may decide on the use of the deducted charge amount for administrative expenses incurred by those organizations and specialists on a case-by-case basis after obtaining the approval from the Prime Minister.

Section 3

MORTGAGED ASSETS

Article 32. Assets mortgaged for loans and bond issue

1. Except for the policy banks’ government-guaranteed loans and bond issues, enterprises, organizations and individuals involved in government-guaranteed loan-funded projects shall mortgage their assets for the government guarantee-granting agency (the Ministry of Finance) in accordance with law and the guidance of the Ministry of Finance.

2. Assets mortgaged to secure the performance of the guaranteed’s obligations toward the Ministry of Finance are those formed from the government-guaranteed loan, other assets from equity capital and other lawful funds of the guaranteed or assets of other organizations and individuals involved in the government-guaranteed loan-funded projects. The mortgaged asset value must be at least equal to 120% of the government-guaranteed loan principal or bond.

3. The mortgaged assets shall be managed and properly used by the guaranteed. The mortgaged assets may not be sold or exchanged, unless it is so agreed by the Ministry of Finance. The guaranteed shall mortgage other assets to secure the outstanding amount of the government-guaranteed loan or bond before demortgaging the initially mortgaged assets.

4. The Government shall decide on the mortgage of assets to secure the government-guaranteed loan or bond in case the mortgage cannot be effected under law or due to the lack of applicable regulations or when the mortgaged assets become state property before the government-guaranteed loan ceases to be effective or the guarantee is granted under the appointment of a competent authority.

Article 33. Management of the asset mortgage

1. The asset mortgage contract shall be concluded and registered as a secured transaction before the Ministry of Finance issues a letter of guarantee.

2. The guaranteed shall register the security transaction for the assets mortgaged for a government-guaranteed loan or bond issue in accordance with the law on secured transactions after the asset mortgage contracts is concluded between the guaranteed and the Ministry of Finance or an organization authorized by the Ministry of Finance.

3. The Ministry of Finance may hire independent organizations to valuate, examine and supervise the mortgaged assets in case of coercive implementation of law and handling of the mortgaged assets. The guaranteed shall pay these expenses.

4. Parties related to the mortgaged assets shall comply with the law on mortgaged assets.

5. The asset mortgage contract shall cease to be valid only when the guaranteed fulfills all obligations to the lender under the letter of guarantee and to the Ministry of Finance under the signed documents related to the letter of guarantee.

Article 34. Handling of mortgaged assets

1. If the guaranteed fails to perform or to fully perform the debt payment obligations and the Ministry of Finance have fully performed the debt payment for the guaranteed while the former are incapable of repaying the Ministry of Finance, the mortgaged assets shall be handled to ensure debt recovery for the Ministry of Finance.

2. The method of handling the mortgaged assets must comply with the asset mortgage contract and the law on secured transactions.

3. Proceeds from the handling of mortgaged assets will be recovered for the debt payment accumulation fund as a source for payment of debts of government-guaranteed loans,

Article 35. Cancellation and termination of asset mortgage

1. The cancellation and termination of asset mortgage to secure the payment obligations for government-guaranteed loans and bond issues must comply with current law.

2. The Government shall decide on the cancellation or termination of asset mortgage to secure the government-guaranteed loans or bond issues in case the asset mortgage is no longer valid under the law on secured transactions or the assets mortgaged for the government-guaranteed loans or bond issues have become state property.

Section 4

ASSIGNMENT, TRANSFER

Article 36. Assignment or transfer of loans or bonds

1. The assignment or transfer of government-guaranteed loans or bonds by the principal is subject to approval by the Ministry of Finance. The Ministry of Finance shall only consider the requests for assignment or transfer of loans or bonds by the principal if the assignment or transfer does not increase the obligations of the guarantor.

The Ministry of Finance shall reply in writing on its approval or disapproval within 30 days after receiving a complete dossier of request for assignment or transfer from the principal, which must comprise:

a/ The guarantee’s written request for approval of assignment or transfer clearly stating the reason for the assignment or transfer and the assignee or transferee and at the same time certifying that the assignment or transfer does not increase the obligations of the guarantor (original);

b/ The guaranteed’s written approval of the assignment or transfer (original);

c/ The draft document on assignment or transfer of the loan or issued bond (if any), which has been agreed upon by the concerned parties and states that the loan or bond assignee or transferee agrees to take over the obligations and responsibilities of the initial principal under the loan or bond issue agreement.

2. The assignment or transfer of a government-guaranteed loan by the guaranteed must be approved by the Prime Minister. The assignee or transferee must meet the conditions on the guaranteed as prescribed by law and this Decree.

Within 30 days after receiving a complete dossier of the guaranteed, the Ministry of Finance shall report thereon to the Prime Minister for approval or disapproval. The dossier (original) must comprise:

a/ The plan on assignment or transfer of the government-guaranteed loan, clearly stating the name of the assignee or transferee; the reason for assignment or transfer; the capability of the assignee or transferee; the operation plan of the assignee or transferee on the projects; proof of the financial capability of the assignee or transferee with regard to the capability to repay the outstanding loan amount (original);

b/ The financial statements of the last 3 years of the assignee or transferee, which have been audited by the State Audit Office or an independent audit firm (certified copies);

c/ The commitment of the assignee or transferee of the loan or issued bond of the guaranteed to take over the obligations and responsibilities toward the government-guaranteed loan or issue bond corresponding to the scope of assignment or transfer from the guaranteed (original);

d/ The principal’s written no-protest against the loan assignment or transfer (certified copy).

The Ministry of Finance shall issue a written reply to the guaranteed within 5 working days after receiving the opinion of the Prime Minister.

Article 37. Assignment and transfer of stocks and contributed capital

1. Parent companies, capital-contributing organizations or individuals on the list of shareholders holding 65% of the actually contributed charter capital of the guaranteed, that have committed and registered with the Ministry of Finance before the grant of guarantee, may not assign or transfer their contributed capital to shareholders being other organizations or individuals outside the list, unless it is so approved by the Ministry of Finance.

2. If parent companies, capital-contributing organizations or individuals on the list of shareholders holding 65% of the actually contributed charter capital, that have already committed and registered with the Ministry of Finance before the grant of guarantee, request to assign or transfer their contributed capital to shareholders being other organizations or individuals (not on the list of registered shareholders), the Ministry of Finance shall consider and report thereon to the Prime Minister for approval of the assignment or transfer within 15 working days if the stocks or contributed capital assignees or transferees (not on the list of registered shareholders) meet the criteria on financial capability at least equal to the assignors or transferors of the guaranteed and after the receipt of a complete dossier as follows:

a/ The guaranteed’s written request for assignment or transfer, clearly stating the name of the assignor or transferor; the name of the assignee or transferee; the reason for assignment or transfer (original);

b/ Documents proving the capability of the assignee or transferee (certified copies);

c/ The financial statements of the last 3 years of the assignee or transferee, already audited by the State Audit Office or an independent audit firm (certified copies);

d/ The written commitment of the assignee or transferee to take over all responsibilities and obligations of the assignor or transferor corresponding to the assigned or transferred stocks or contributed capital (original).

3. The guaranteed being a state enterprise or credit institutions to be equitized shall report to the Ministry of Finance for opinion on the equitization plan and government-guaranteed loan-handling plan before submitting them to a competent authority for approval.

4. The guaranteed shall report in writing to the Ministry of Finance for opinion on partial or full assignment of the company’s stocks owned by Vietnamese organizations or individuals to a foreign strategic shareholder before implementation.

5. Before effecting the listing on the stock exchange and stock trading under law, the guaranteed shall report to the Ministry of Finance on the expected listing time and place.

6. In all cases of assignment or transfer of the guaranteed’s stocks or contributed capital, the guaranteed shall still be fully accountable for the government-guaranteed loan in accordance with the commitment in the loan contract and letter of guarantee and other commitments with the Ministry of Finance.

Article 38. Assignment or transfer of post-investment projects and assets

1. The assignment or transfer of post-investment projects or assets of the guaranteed is subject to approval of the Ministry of Finance before implementation.

2. If the assignment or transfer of a post-investment project or assets alters the guaranteed’s rights over the mortgaged assets, the guaranteed shall supplement other assets to secure its obligations before effecting the assignment or transfer.

3. The transfer of post-investment assets shall not change the guaranteed’s relevant obligations toward the lender and the Ministry of Finance.

4. Parties involved in a project or asset assignment or transfer shall adjust the contract on asset mortgage or future asset mortgage and the enclosed annexes before the transfer and re-register the secured transaction after the transfer.

Section 5

MANAGEMENT OF RISKS FOR GOVERNMENT-GUARANTEED LOANS AND BOND ISSUES

Article 39. Risk management principles

1. Government-guaranteed loans and bond issues shall be periodically classified by the Ministry of Finance and included in the debt classification table under the public debt-related risk management program based on the actual performance of debt payment obligations of the guaranteed:

a/ Group 1: Loans and bond issues for which debts are being paid fully and on time;

b/ Group 2: Loans and bond issues for debts (interest or principal or both) have been paid with money borrowed from the debt payment accumulation fund in 1 to 3 periods and currently there is no outstanding debt owed to the fund;

c/ Group 3: Loans and bond issues for which debts have been paid with money borrowed from the debt payment accumulation fund in 1 to 3 periods and currently there is some immature debt owed to the fund;

d/ Group 4: Loans and bond issues for which debts have been paid with money borrowed from the debt payment accumulation fund in more than 3 periods, and  currently there is some overdue debt to the fund;

dd/ Group 5: Loans and bond issues for which debts cannot be paid to the debt payment accumulation fund or there is low capability to recover debts for the fund.

2. The guaranteed that incur debts of group 3 to group 5 shall submit to the financial supervision by the Ministry of Finance over the enterprises’ monthly cash flows so as to manage risks via the service bank.

Article 40. Risk-handling measures

1. The Ministry of Finance shall classify debts in the course of monitoring government-guaranteed loans and bond issues under the principles prescribed in Article 39 of this Decree.

2. The Ministry of Finance shall implement the following risk management operations:

a/ Not considering the grant of guarantee to the guaranteed with outstanding debts to the debt payment accumulation fund, and to parent companies with subsidiary companies owing debts of groups 4 and 5 prescribed in Article 39 of this Decree until all debts to the debt payment accumulation fund and government-guaranteed debts are fully paid;

b/ Supervising the guaranteed’s cash flows via the service bank as prescribed in this Decree;

c/ Exercising the right to recover debts from the guaranteed under the provisions of this Decree.

3. The guaranteed owing debts of groups 4 and 5 are subject to the following risk management measures:

a/ If owing debts of group 4, the guaranteed shall monthly report to the Ministry of Finance and its managing agency (if any) on all revenues and expenditures of the enterprise;

b/ If owing debts of group 5, the guaranteed shall strictly comply with the handling measures approved by the Prime Minister, including the handling of security assets (if any) to recover debts.

4. Annually, the debt payment accumulation fund shall plan and arrange sources for payment of debts of groups 4 and 5 for government-guaranteed loans on the principle of ensuring the fund’s balance at least equal to the amounts to be paid in the year from the source of collected government-guarantee charges. If the fund lacks sources for debt payment, the Ministry of Finance shall report thereon to the Prime Minister for handling.

Section 6

REPORTING, INSPECTION, SUPERVISION

Article 41. Reporting regime applicable to the guaranteed

1. Biannually and annually, the guaranteed shall send the financial statements to the Ministry of Finance. The annual financial statements must be audited by the State Audit Office or an independent audit firm. If necessary, the Ministry of Finance may request the guaranteed to report on relevant contents.

2. Reporting the money withdrawal, debt payment, outstanding guaranteed debt, the implementation of the program or project, the debt payment accumulation of the project and other contents in each stage:

a/ In the construction stage;

b/ Upon completion of the construction stage;

c/ Evaluation of the project upon completion.

The specific contents and forms of each type of report shall be specifically guided by the Ministry of Finance.

Article 42. Inspection and supervision

1. The Ministry of Finance may periodically supervise the performance of obligations by the guaranteed:

a/ Money withdrawal against the registered plan;

b/ Performance of debt payment obligations;

c/ Arrangement of equity capital as prescribed;

d/ Performance of the asset mortgage obligation;

dd/ Supervision of the implementation of additional commitments of the guaranteed as requested by the Government and the Prime Minister on a case-by-case basis.

2. If the guaranteed show signs of financial difficulty or breaches its obligations, or there arise outstanding debts of the loan or issued bond or compulsory borrowing from the accumulation fund of group 4 or 5 as prescribed in Article 39 of this Decree on debt classification, the Ministry of Finance may examine the financial situation of the project or to request the owner-representing agency (if any) or sector-managing agency to inspect the financial situation of the project, identify the causes and report thereon to the Prime Minister for handling.

3. The principal may share information on inspection and supervision reports (if any) within their permitted scope with the guarantor for coordinated risk management.

Section 7

MEASURES TO ENSURE PAYMENT OF LOAN OR BOND DEBTS BY THE GUARANTEED

Article 43. Ensuring payment of loan and bond debts by the guaranteed

1. The guaranteed shall arrange capital sources for full and on-time payment of loan or bond debts.

2. If the guaranteed is not prepared for debt payment, the guarantor (the Ministry of Finance) has the right:

a/ To request the service bank to automatically deduct money from the project account of the guaranteed for debt payment to the principal;

b/ To request the service bank to demand the credit institutions where the guaranteed opens its deposit accounts to deduct money from these accounts for debt payment in case the project account balance is not sufficient for debt payment;

c/ If the guaranteed is liable to purchase insurance for its debt payment obligations, it shall work with the insurer on the debt payment according to the signed insurance contract.

3. Ensuring payment of debts by parent companies (if any) or groups of big shareholders:

a/ If the guaranteed no longer has any sources for debt payment, it shall report thereon to its parent company (if any) or group of shareholders holding at least 65% of the stocks already registered with the Ministry of Finance 6 months before the debt maturity date for the latter to pay debts for the guaranteed; and at the same time send copies of the report to the Ministry of Finance and the owner-representing agency (for state enterprises or credit institutions or enterprises or credit institutions with state capital representing over 50% of their charter capital);

b/ If the parent company or group of shareholders holding at least 65% of the stocks already registered with the Ministry of Finance cannot pay the debts, the guaranteed shall take out compulsory loans from the debt payment accumulation fund for debt payment to the principal under the conditions specified in Articles 44 and 45 of this Decree and submit to the Ministry of Finance’s supervision as prescribed in Clause 2, Article 39, and Clauses 2 and 3, Article 40, of this Decree.

The Ministry of Finance shall coordinate with the related agencies in making sum-up reports to the Prime Minister on handling solutions. The guaranteed shall abide by the handling plan approved by the Prime Minister.

4. If the guaranteed becomes fully insolvent (being unable to restore its production from the time the Prime Minister approves the handling plan), the Ministry of Finance shall propose the handling of mortgaged assets under Article 34 of this Decree to the Prime Minister for decision.

If the proceeds from the handling of mortgaged assets are not enough for payment of loan debts, the guaranteed or its parent company or group of shareholders holding at least 65% of the stocks already registered with the Ministry of Finance shall continue acknowledging the remaining debts. If the guaranteed goes bankrupt, relevant provisions of law will apply.

5. In all above-mentioned cases of being unable to pay debts, if subjective causes are identified, the Ministry of Finance shall propose the Prime Minister to assign the owner-representing agencies (for state enterprises or credit institutions or enterprises or credit institutions with state capital representing over 50% of their charter capital) or related agencies to handle according to law the organizations and individuals that commit violations leading to the incapability for debt payment according to loan agreements or compulsory loan contracts.

6. The guaranteed that fails to report in advance to the Ministry of Finance on its difficulties in performing the debt payment obligations, thus causing damage to the debt payment accumulation fund for the money amounts mobilized for payment shall compensate for all material damage causes to the fund.

7. An enterprise having outstanding debts to the debt payment accumulation fund for payment of debts of the government-guaranteed loan or on-lent loan shall not be further considered for grant of guarantee for new loans or for approval of projects on-lent with the Government’s foreign loan.

Article 44. Compulsory borrowing from the debt payment accumulation fund

1. The guaranteed that face temporary or long-term difficulties, making it unable to pay the due debts of the government-guaranteed loan or bond issue, shall borrow the debt payment accumulation fund the amount paid by the fund for debts in the cases specified at Point b, Clause 3 of Article 43:

a/ For paying debts in 1 period (principal and/or interest), the Minister of Finance will decide on the borrowing from the debt payment accumulation fund;

b/ For paying debts for 2 or more periods (principal and/or interest), the Ministry of Finance shall report thereon to the Prime Minister for consideration and decision.

2. When borrowing from the debt payment accumulation fund, the guaranteed and its parent company (if any) shall sign a compulsory borrowing contract with the Ministry of Finance for the amount paid for the debts of the guarantee by the debt payment accumulation fund. The parent company shall share the debt payment obligation to the fund if the guaranteed cannot pay fully or partially the debts under the signed compulsory borrowing contract.

3. During the period of borrowing from the debt payment accumulation fund:

a/ The guaranteed shall allow the Ministry of Finance to control the project account and other deposit accounts during the period of borrowing from the debt payment accumulation fund and to automatically deduct money therefrom to pay due debts to the fund;

b/ The guaranteed shall report to the Ministry of Finance all revenues, expenditures, cash and deposit balances, financial status, and production and business activities of the project on a quarterly basis if borrowing for paying debts in up to 2 payment periods, or on a monthly basis if borrowing for paying debts in more than 2 payment periods and make other reports at the request of the Ministry of Finance since the date of starting compulsory borrowing from the debt payment accumulation fund;

c/ The Ministry of Finance may perform annual compulsory financial examinations of the guaranteed until all debts are paid to the debt payment accumulation fund. In case of necessity, the Ministry of Finance may decide on inspection in accordance with the law on inspection.

4. Dossiers of compulsory borrowing from the debt payment accumulation fund:

The guaranteed shall prove the temporary or permanent incapability to pay debts or the parent company (if any) shall prove its incapability to pay debts for the guaranteed, enclosed with the following documents:

a/ The balances of the project account and other accounts of the guaranteed, which are not enough for payment of some or all due debts of the government-guaranteed loan or bond issue, certified by the service bank and the banks where such accounts are opened;

b/ The guaranteed or parent company (if any) does not earn profits and cannot arrange adequate sources, enclosed with the financial statement of the preceding year, the biannual reports of the guaranteed and the parent company (if any);

c/ The letters of rejection to grant loans issued by at least 3 commercial banks to the guaranteed or the parent company (if any);

d/ The guaranteed’s written request for borrowing from the debt payment accumulation fund, specifying the borrowed amount (principal, interest and charge), borrowing term, debt payment schedule and projected debt payment sources, with the opinions of the parent company (if any) and the owner-representing agency (for state enterprises and credit institutions or enterprises and credit institutions with state capital representing over 50% of their charter capital), sent to the Ministry of Finance 3 months before the maturity date of the debt.

5. Debt payment under a compulsory borrowing contract:

a/ The guaranteed shall pay debts to the debt payment accumulation fund under the signed compulsory borrowing contract;

b/ If the project account or other deposit accounts of the guaranteed at commercial banks have balances as stated in the quarterly and monthly reports of the guaranteed, the Ministry of Finance may request the service bank or the banks of these accounts to deduct and transfer the money from the project account or other accounts and notify the guaranteed thereof in order to recover overdue debts and due debts (if any) if the guaranteed incur no loss in the preceding fiscal year, or in order to recover immature debts (if any) for the debt payment accumulation fund if the guaranteed incur no loss in the 2 preceding years.

Article 45. Conditions on compulsory borrowing from the debt payment accumulation fund

1. The guaranteed shall sign a compulsory borrowing contract with the Ministry of Finance (the debt payment accumulation fund) for each compulsory borrowing upon the occurrence of a violation prescribed in Article 43 of this Decree under the following conditions:

a/ The compulsory loan borrowed from the debt payment accumulation fund to  pay due debts of the government-guaranteed loan must be automatically authorized on an irrevocable basis by the guaranteed to the fund for direct payment to the lender, which shall be considered the principal debt of the guaranteed to the fund;

b/ The loan and debt payment currency is the original currency of the loan agreement or bond issue agreement. The debt payment currency may be the loan currency or Vietnam dong converted therefrom at the selling rate officially announced by Vietcombank at the time of debt payment;

c/ The loan interest rate is the interest rate of the government-guaranteed loan or bond under the loan agreement or bond issue agreement. This interest rate may be adjusted if the interest rate of the loan agreement or bond issue agreement is adjusted in the course of implementation;

d/ The debt payment accumulation fund’s loan interest shall be calculated based on the outstanding loan and the number of actual borrowing days counted from the date the Ministry of Finance transfers money to the lender on behalf of the guaranteed to the date the Ministry of Finance receives back the total loan amount from the guaranteed, with 360 days regarded as one year;

dd/ Loan term: Depending on the debt paying capability of each project, the Minister of Finance will consider and decide on the compulsory loan term for loans for payment of interest of no more than 2 debt payment periods; for loans for payment of principal (and interest, if any), the loan term must not exceed 2 years. For cases where the compulsory loan term exceeds the prescribed time limit, the Ministry of Finance shall report them to the Prime Minister for consideration and decision;

e/ The debt payment accumulation fund’s loan principal and interest shall be repaid annually;

g/ The sources for loans from the debt payment accumulation fund must comply with Point d, Clause 1, Article 36 of the Law on Public Debt Management;

h/ The guaranteed shall bear all actually arising costs related to the transfer of money for debt payment on behalf of the guaranteed.

2. A contract on compulsory borrowing from the debt payment accumulation fund shall be signed before the Ministry of Finance transfers money to the lender for debt payment on behalf of the guaranteed.

Article 46. Performance of obligations by the guarantor

1. Upon the receipt of a written request for debt payment of the to the principal, the guarantor (the Ministry of Finance) shall pay debts to the to the principal from the debt payment accumulation Fund as prescribed in Point d, Clause 1, Article 36 of the Law on Public Debt Management.

2. The Ministry of Finance shall provide compulsory loans for the guaranteed for debt payment before making payment to the to the principal and after the guaranteed implements the provisions of Article 44 of this Decree.

Article 47. Handling of the debt payment accumulation fund’s sources for performance of obligations of the guarantor

1. If the debt payment accumulation fund does not have enough sources for the guaranteed to borrow for debt payment to the to the principal, the Ministry of Finance shall report solutions to the Prime Minister.

2. If the guaranteed loses its solvency and there are insufficient sources for debt payment to the debt payment accumulation fund even after the security assets are handled, the Ministry of Finance shall report thereon to the Prime Minister for offsetting allocation.

Article 48. Handling of the guaranteed’s violations

1. The guaranteed shall be considered committing acts of violation when failing to fulfill its relevant responsibilities prescribed in this Decree.

2. If violations are not redressed by the guaranteed within 60 days after the Ministry of Finance sends a notice thereof, the Ministry of Finance shall apply financial supervision to the guaranteed and simultaneously report thereon to the Prime Minister for disapproving grant of guarantee for new loans or onlending of foreign loans or allocation of state budget funds to the guaranteed.

3. The Ministry of Finance shall apply the following handling measures to the violating guaranteed:

a/ Requesting the lender to suspend the money withdrawal being requested if detecting problems in the money withdrawal dossier and requesting the guaranteed to modify such dossier;

b/ Collecting an extra 10% of the government guarantee charge rate already approved by the Prime Minister for the project currently applicable to the government-guaranteed loan or bond issue for 3 subsequent years, provided the total guarantee charge rate must not exceed 2%/year when the guaranteed fails to arrange equity capital already registered in the plan year or as prescribed by law or fails to carry out procedures for asset mortgage, to comply with the information and reporting regime and to materialize the commitment to maintain the project account balance and to comply with other provisions of this Decree.

Chapter IV

RESPONSIBILITIES AND OBLIGATIONS OF AGENCIES, ORGANIZATIONS AND INDIVIDUALS

Section 1

RESPONSIBILITY OF STATE MANAGEMENT AGENCIES

Article 49. The Ministry of Finance

1. To perform the responsibilities of the guarantee-granting agency defined in Clause 1, Article 36 of the Law on Public Debt Management:

a/ To participate in negotiations, to give opinions on loan conditions and agreements proposed for government guarantee on the basis of dossiers provided by enterprises and credit institutions as prescribed in Articles 15 and 20 of this Decree;

b/ To apply measures prescribed in this Decree to recover debts and expenses arising from the debt payment for the guaranteed, including requesting the service banks or banks where the guaranteed open their accounts to retain and deduct money of the guaranteed for payment to the debt payment accumulation fund without consent of the guaranteed (account owners);

c/ To report to the Prime Minister on the performance and sources for performance of obligations of the guarantor as prescribed in Article 47 of this Decree;

d/ To report to the Prime Minister periodically in the second quarter of the subsequent year on the general situation of guarantee amounts already granted as prescribed in Point g, Clause 1, Article 36 of the Law on Public Debt Management:

- The situation and specific data of government-guaranteed loans and bond issues in the previous year;

- Accumulative data by the end of the previous year of all government-guaranteed loans and bond issues;

- General assessment of the implementation of guarantee limits in the previous year;

- General assessment of the performance of obligations of the guaranteed;

- Results, limitations and problems in the grant and management of guarantee, and proposals.

2. To monitor the money withdrawal and debt payment by the guaranteed with regard to government-guaranteed loans.

3. To provide guidance and organize examination and supervision of the assets mortgaged for loans and international bond issues guaranteed by the Government.

4. To appraise or give opinions to the owner-representing agencies, sector-managing agencies and the guaranteed before submitting for approval the policy on government guarantee grant for the cases prescribed in Clauses 1 and 2, Article 12 of this Decree; to give opinions to the owner-representing agencies, sector-managing agencies and the guaranteed on matters related to the government-guaranteed loans or bond issues in the course of implementation.

5. To consult the owner-representing agencies, sector-managing agencies and provincial-level People’s Committees on enterprises, programs and projects funded with government-guaranteed loans in the course of appraisal for grant of government guarantee.

6. To report to the Prime Minister on matters arising unexpectedly in the course of managing the government-guaranteed loans and bond issues.

7. To guide a number of contents as prescribed in Clause 1, Article 32, and Clause 2, Article 41, of this Decree.

Article 50. The Ministry of Justice

1. To participate in negotiations and give opinions on legal issues in draft foreign-loan agreements and international-bond issue agreements proposed for government guarantee and draft letters of guarantee.

2. To assume the prime responsibility for exchange of opinions on contents of legal opinions and to give legal opinions as prescribed by law for the lenders.

3. To coordinate with the Ministry of Finance in handling arising legal disputes related to the implementation of letters of guarantee.

Article 51. The Ministry of Foreign Affairs

To coordinate with the Ministry of Finance in appointing appropriate overseas Vietnamese representative missions to be representatives to receive procedural dossiers as stated in the letters of guarantee.

Article 52. The State Bank of Vietnam

1. To consult the Ministry of Finance on the interest rates of domestic loans of enterprises which are proposed for grant of government guarantee.

2. To approve domestic and international loan and bond issue plans of state credit institutions or to give opinions on domestic and international loan and bond issue plans of credit institutions proposed for government guarantee for implementation of targeted credit programs of the State.

3. To certify the registration or registration of change of government-guaranteed foreign loans or international bond issues for the guaranteed after the Ministry of Finance issues letters of guarantee.

4. To contribute opinions to the Ministry of Finance on the capital adequacy ratio of credit institutions requesting approval of government guarantee policy or grant.

5. To coordinate with the Ministry of Finance in reporting to the Prime Minister on allocation of foreign currencies as prescribed by law for government-guaranteed foreign loans and international bond issues in case of necessity for the guarantor to perform the payment obligations according to the letters of guarantee at the request of the Ministry of Finance.

6. To update into the credit information system of the State Bank of Vietnam the information relating to the status of loans of the guaranteed at credit institutions and foreign bank branches.

Article 53. Ministries, ministerial-level agencies, sector-managing agencies

1. To approve domestic and international loan and bond issue plans of wholly state-owned enterprises or contribute opinions on these plans of enterprises or branches or fields under their respective state management, with the following principal contents:

a/ Approving the enterprises’ loans for investment in programs or projects, for wholly state-owned enterprises;

b/ Commenting on the reasonability of calculation parameters of enterprises (sale prices or projected revenue sources; capacity and operation frequency of machinery and equipment; depreciation; etc.) for formulation of financial plans and project of cash flows for debt payment;

c/ Assessing the efficiency and debt payment capability of project owners and financial plans of projects;

d/ The feasibility of the enterprises’ commitments in loan agreements.

2. To urge the guaranteed being enterprises under their respective management to strictly implement the committed obligations toward the lenders and the Ministry of Finance.

3. To assume the prime responsibility for examinations and supervisions and for the handling of matters related to the violations of obligations of enterprises or credit institutions funded with government-guaranteed loans under their respective management.

4. To notify in writing the Ministry of Finance of the decisions, policies or circumstances that may affect the project implementation and the capability to perform payment obligations under loan agreements, and to propose handling plans of the enterprises under their respective management.

5. To contribute opinions in the capacity as the owner representative in case enterprises or credit institutions with state-contributed capital representing less than 100% of their charter capital borrow loans proposed for grant of government guarantee.

6. To contribute opinions on matters under their respective management which are related to programs or projects funded with loans proposed for grant of government guarantee at the request of the Ministry of Finance in the process of appraising the guarantee grant policy or the grant of guarantee for enterprises.

7. To coordinate with the Ministry of Finance in handling arising disputes related to the implementation of letters of guarantee.

Article 54. Provincial-level People’s Committees

1. To give opinions on business activities of guarantee-requesting enterprises (if any) in their localities; on the project owners’ carrying out of procedures related to investment projects in their localities at the request of the Ministry of Finance.

2. To coordinate in handling mortgaged assets under their management.

3. To supervise the program- or project-implementing enterprises’ law compliance in their localities.   

Section 2

RESPONSIBILITIES AND OBLIGATIONS OF PARTIES INVOLVED IN GOVERNMENT GUARANTEE

Article 55. Responsibilities of enterprises and credit institutions requesting the grant of guarantee

1. To provide adequate dossiers, take responsibility for the truthfulness and accuracy of figures and dossiers provided for the Ministry of Finance to propose the consideration of and submit for approval the government guarantee grant policy and to propose the grant of government guarantee according to this Decree and its guiding documents.

2. To consult the Ministry of Finance before authorizing the capital arrangement when specific financial conditions on the loans proposed for grant of government guarantee are available after the guarantee grant policy is approved.

3. To assume the prime responsibility for negotiations on domestic and foreign loan agreements and international bond issue agreements.

4. To provide related agencies with draft loan agreements, draft letters of guarantee and legal opinions (if any) on the domestic and foreign loans and international bond issues at least 7 working days before proceeding with the negotiations.

5. To provide the Ministry of Finance with domestic- and foreign-loan agreements and international bond issue agreements after they are officially signed.

Article 56. Obligations of the guaranteed

1. To organize the issue of government-guaranteed domestic and international bonds after obtaining approval from a competent authority.

2. To suggest to the Ministry of Finance the service bank for projects; to open and register with the Ministry of Finance the project account at the service bank, and concurrently send notices of all existing deposit accounts opened at credit institutions enclosed with certifications of these credit institutions to the Ministry of Finance. In case of change of the service bank, to report the reason therefor in writing to the Ministry of Finance which shall grant approval within 5 working days after the receipt of a written request.

3. To fully and promptly implement the obligations of the borrower or bond issuer in accordance with the signed loan or bond issue agreement already guaranteed by the Government.

4. To register or register change of government-guaranteed foreign loans or international bond issues with the State Bank of Vietnam under current law.

5. To arrange adequate equity capital in time according to the project implementation schedule: To ensure adequate equity capital sources according to the project implementation schedule with regard to project items financed with equity capital; when finalizing completed works of the project, to ensure adequate equity capital according to the ratio registered upon submission of the dossiers of request for grant of guarantee.

6. To transfer revenues of the program or project as soon as they arise into the project account according to the ratio of the government-guaranteed loan to the total loan value of such program or project.

To commit to maintain a balance in the project account (in the original currency or in Vietnam dong at the exchange rate of the service bank) from the first year when the debt payment obligations arise in order to ensure the on-time debt payment as prescribed.

7. To regularly assess potential risks of the enterprise and project and study the implementation of risk prevention operations for loans according to its competence in order to ensure the debt payment capability of the enterprise.

8. To perform the guaranteed’s obligations toward the Ministry of Finance:

a/ To mortgage assets for government-guaranteed loans or bond issues; to declare and register secured transactions to the mortgaged assets and supplement mortgaged assets for the Ministry of Finance in accordance with the law on secured transactions;

b/ To pay guarantee charges fully and on time as notified by the Ministry of Finance;

c/ To notify the Ministry of Finance of any change related to the loan agreement, borrower (principal), structure of shareholders or capital-contributing individuals in the enterprise implementing the program or project funded with the government-guaranteed loan;

d/ To implement the information and reporting regime fully and on time as prescribed by the Ministry of Finance;

dd/ To report in writing to the Ministry of Finance at least 3 months before the debt payment date on its incapability to pay all or some of due debts, clearly stating the reason;

e/ To accept compulsory debts with the Ministry of Finance if the Ministry of Finance provides a loan from the debt payment accumulation fund for payment of debts of the government-guaranteed loan and to bear all arising costs related to the transfer of money for debt payment;

g/ To agree on and strictly comply with other necessary measures in the course of guarantee management at the request of the Ministry of Finance;

h/ To closely coordinate with the Ministry of Finance in the process of inspecting the program or project implementation when necessary.

9. To fully provide money withdrawal dossiers and documents to the service bank for certification of their conformity with the signed commercial contract and loan agreement before forwarding these dossiers to the lender.

10. To pay service charges to the service bank and other arising expenses (if any) to related parties as prescribed by this Decree.

11. To perform annual audits of ongoing projects, annual audits of the enterprise upon completion of the projects and send copies of the audit reports to the Ministry of Finance.

12. To comply with other relevant provisions of this Decree.

Article 57. Responsibilities of parent companies

1. If the guaranteed is a member company after the parent company-subsidiary model, the parent company shall:

a/ Perform the parent company’s obligations under the written commitment sent to the Ministry of Finance before the appraisal of the grant of government guarantee;

b/ Provide financial support for the guaranteed in order to ensure the project implementation on schedule, perform the obligation of paying due debts to the lender when the guaranteed meets with difficulties.

2. The parent company shall supervise and direct the guaranteed to fully perform the obligations committed to the lender and the Ministry of Finance under the concluded documents.

Article 58. Responsibilities of the lenders and the principal

1. The lenders shall closely cooperate with the Ministry of Finance in the course of negotiation on letters of guarantee.

2. The principal shall cooperate with the Ministry of Finance in the course of implementing the government-guaranteed loans and in the effective period of the letters of guarantee as follows:

a/ To send to the Ministry of Finance and concurrently to the lender the detailed copies of notices of every withdrawn money amount, interest rate changes (if any) and debt payment requests;

b/ To send to the Ministry of Finance notices of the borrowers’ money withdrawal, debt payment and project implementation when any abnormal matter occurs;

c/ To send to the Ministry of Finance other notices as stated in the government-guaranteed loan agreements.

3. The principal shall share necessary information with the Ministry of Finance on the lenders, projects and government-guaranteed loans, inspection and supervision reports within its permitted scope in order to ensure the loans be used for proper purposes and the borrowers fulfill the obligations under the loan agreements.

Article 59. Responsibilities of service banks

A service bank has the following responsibilities:

1. To perform its tasks and coordinate with the Ministry of Finance and related agencies in the course of managing the relevant government-guaranteed programs, projects, loans and bond issues under the provisions of this Decree.

2. To provide the Ministry of Finance with detailed reports of the National Credit Information Center of the State Bank of Vietnam on the credit status of the guaranteed at the end of every fiscal year.

3. To apply necessary remedies at the request of the Ministry of Finance in accordance with law and this Decree in order to recover government-guaranteed loan debts, amounts lent by the debt payment accumulation fund to the guaranteed for debt payment and expenses arising from the debt payment for the guaranteed.

4. To effect equal treatment in the management of loans, recovery and payment of debts and the application of measures to secure the government-guaranteed loans like other loans of the guaranteed at the service bank.

Chapter V

IMPLEMENTATION PROVISIONS

Article 60. Effect

1. This Decree takes effect on March 1, 2017.

2. This Decree replaces the Government’s Decree No.15/2011/ND-CP of February 16, 2011, on grant and management of government guarantee.

Article 61. Transitional provisions

1. The government-guaranteed loans and bond issues with remaining debt payment obligations of under 3 years by the effective date of this Decree are not required to comply with the provisions of Articles 24 to 27 (excluding Points a, b and g, Clause 1, Article 27), and Clause 2, Article 32, of this Decree.

2. Loans and bond issues in the course of money withdrawal are not required to comply with the provisions of Article 26, and Clause 9, Article 56, of this Decree.

3. Loans, bond issues, programs or projects entitled to the special government guarantee mechanism which are approved before this Decree takes effect continue to enjoy the approved mechanism.

4. Projects with the guarantee grant policy already approved by the Government are not required to go through the guarantee grant approval procedures prescribed by this Decree.

5. Programs and projects with the guarantee grant policy already approved must comply with the government guarantee level prescribed in Article 8 of the Government’s Decree No.15/2011/ND-CP of February 16, 2011, on grant and management of government guarantee, within one year after this Decree takes effect or within the period approved by the Government or the Prime Minister. Upon the expiry of this period, the grant of government guarantee must comply with this Decree.

6. The government guarantee for the two policy banks to issue bonds under plans assigned annually by competent agencies will continue to comply with the Government’s Decree No. 01/2011/ND-CP of January 5, 2011, on the issue of government bonds, government-guaranteed bonds and local administration bonds, and Decree No.15/2011/ND-CP of February 16, 2011, on the grant and management of government guarantee, until a document is promulgated to replace Decree No. 01/2011/ND-CP.

7. The mortgage of assets of projects already granted with government guarantee before this Decree takes effect must comply with the law on property mortgage for government-guaranteed loans or bond issues at the time the government guarantee was granted.

Article 62. Organization of implementation

1. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees, and related enterprises, organizations and persons shall implement this Decree.

2. The Ministry of Finance shall guide the implementation of contents of this Decree, as necessary, to meet the state management requirements.

Prime Minister

(Signed)

 

Nguyen Xuan Phuc

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