What are responsibilities of an enterprise acting as an obligor involved in government guarantee in Vietnam?

What are responsibilities of an enterprise acting as an obligor involved in government guarantee in Vietnam?

Pursuant to Article 62 of the Decree 91/2018/NĐ-CP stipulating responsibilities of an enterprise acting as an obligor involved in government guarantee in Vietnam as follows:

1. Provide adequate documents as requested and assume responsibility for the accuracy and truthfulness of any figures and documents included in its application for approval for the government guarantee proposal, or issuance of government guarantee, submitted to the Ministry of Finance in conformity with regulations herein and relevant instructional documents.

2. Consult the Ministry of Finance before granting power to allocate funds if an application for government guarantee for a loan requires specific financial conditions after the proposal for government guarantee has been approved.

3. Take charge of negotiating domestic and foreign loan agreements.

4. Provide draft loan agreement, letter of guarantee and legal opinions (if any) relating to a domestic or foreign loan for relevant authorities at least 07 working days before the negotiation.

5. Provide the duly signed domestic or foreign loan agreement for the Ministry of Finance.

6. Organize the conclusion of loan agreement or agreement on bond issue guaranteed by the government after obtaining an approval from a competent authority.

7. Propose a bank to the Ministry of Finance to act as the Serving Bank of the project; open a Project Account at the Serving Bank and register it with the Ministry of Finance, and submit a report to the Ministry of Finance on existing deposit accounts with certification of credit institution where the relevant deposit account is opened. In case of change of the Serving Bank, the obligor must explain reasons thereof in writing to the Ministry of Finance to consider giving approval within 05 working days as from the receipt of the obligor's request.

8. Fulfill obligations of a borrower or bond issuer under terms and conditions of the signed loan agreement or bond issue agreement granted the government guarantee.

9. Carry out procedures for initial registration or registration of changes in a foreign loan guaranteed by the government with the State Bank of Vietnam in accordance with relevant law regulations.

10. Fully allocate owner’s equity according to the progress of the investment project; maintain sufficient owner’s equity according to the project's progress to cover expenditures of project items requiring the owner’s equity; ensure the proportion of owner’s equity as registered in the application for government guarantee when making cost statement of a finished project.

11. Transfer revenues from the investment project immediately when they arise to the Project Account according to the ratio of the guaranteed loan amounts to total borrowed capital of that project.

Commit to maintain the Project Account's balance (in original currency or in VND according to the exchange rate announced by the Serving Bank) from the first year when repayment obligations occur for the purpose of ensuring the payment of debts on schedule.

12. Regularly assess potential risks to the enterprise, the project and adopt appropriate risk prevention measures to ensure the enterprise’s solvency.

13. Fulfill obligations of an obligor towards the Ministry of Finance, consisting of:

a) Provide collateral for the government-guaranteed loan or bond issue, make declaration and registration of secured transactions concerning the collateral, and provide additional collateral to the Ministry of Finance in accordance with law regulations on secured transactions;

b) Pay guarantee fee in full and on schedule according to the notice given by the Ministry of Finance;

c) Inform the Ministry of Finance of any changes relating to a loan agreement, the obligor, the structure of shareholders or capital contributors of the enterprise executing the investment project using funds from a government-guaranteed loan;

d) Strictly comply with reporting policies as regulated by the Ministry of Finance;

dd) Give a written report to the Ministry of Finance at least 03 months before the due date of debts if the obligor becomes insolvent or is unable to make full payment of debts;

e) Get a forced loan from the Ministry of Finance in case the Ministry of Finance approves a loan from the Accumulation Fund for Debt Repayment to repay government-guaranteed loan, or bonds, and pay fees of transferring money for debt repayment;

g) Accept and comply with other necessary sanctions in course of managing the government guarantee at the request of the Ministry of Finance;

h) Closely cooperate with the Ministry of Finance in inspecting the execution of investment project, where necessary;

i) Fulfill other obligations as specified in the written commitment submitted to the Ministry of Finance as prescribed in the Appendix I enclosed herewith.

14. Provide adequate fund withdrawing documents to the Serving Bank so as to check the conformity of such documents with the signed commercial contract and loan agreement before sending them to the lender.

15. Pay service fees to the Serving Bank and other expenses (if any) to relevant parties in accordance with regulations herein.

16. Conduct annual audit of the investment project during the construction phase, and annual audit of enterprise upon the completion of the investment project, and send copies of audit reports to the Ministry of Finance.

17. Comply with other relevant regulations of the Law on public debt management and of this Decree on responsibility of authorities, organizations and individuals receiving and using funds from government-guaranteed loans.

What are responsibilities of a parent company involved in government guarantee in Vietnam?

Pursuant to Article 63 of the Decree 91/2018/NĐ-CP stipulating responsibilities of a parent company involved in government guarantee in Vietnam as follows:

1. If the obligor is an associate company in the form of parent company – subsidiary, the parent company shall:

a) Discharge obligations of a parent company according to the written commitment sent to the Ministry of Finance before processing the application for government guarantee;

b) Give financial assistance to the obligor so as to ensure the project’s progress and payment of due debts to the lender when the obligor defaults.

2. The parent company shall supervise and instruct the obligor to fulfill all obligations towards the lender and the Ministry of Finance according to the signed documents.

3. A written commitment by a parent company that is an enterprise of which 100% charter capital is held by the State to its subsidiary, also the obligor, under regulations in Clause 11 Article 14 and Clause 10 Article 19 herein shall not be aggregated in its guarantee for this subsidiary applying for a loan at a credit institution as prescribed in Clause 4 Article 23 of the Law on management and use of state funds in enterprises.

What are responsibilities of a guaranteed bank for social policies in Vietnam?

Pursuant to Article 64 of the Decree 91/2018/NĐ-CP stipulating responsibilities of a guaranteed bank for social policies in Vietnam as follows:

1. Fulfill obligations and responsibility in accordance with regulations herein, law regulations on bond issuance and relevant legislative documents, including:

a) Formulate the scheme for issuance of guaranteed bonds and submit it to competent authorities for approval; take responsibility for the accuracy and truthfulness of information in the scheme and inform the investors;

b) Organize issuance of guaranteed bonds in accordance with the scheme approved by the Prime Minister and regulations herein;

c) Take responsibility for the issuance of guaranteed bonds and the use of funds obtained therefrom in accordance with the purposes in the scheme approved by the Prime Minister.

2. Conduct audit of annual financial statements and comply with the Ministry of Finance’s regulations on information publishing and reporting.

Best regards!