The loan guarantor in Vietnam has the right to refuse to fulfill the guarantee obligation

The loan guarantor in Vietnam has the right to refuse to fulfill the guarantee obligation​ (Illustrative image)

Article 17 of Circular 06/2011/TT-BKHCN stipulates the rights and obligations of the guarantor as follows:

1. The guarantor in Vietnam has the right to:

- Request the guaranteed party to provide documents and information related to the guarantee assessment and assurance measures for the guarantee obligation.

- Issue a guarantee certificate, amend or supplement, extend or cancel the guarantee certificate after obtaining written approval from the National Science and Technology Development Fund.

- Request the guarantee recipient to cease lending and retrieve loans prematurely if the guaranteed party violates the guarantee contract, credit contract, or law, and report to the National Science and Technology Development Fund.

- Collaborate with the guarantee recipient to inspect and supervise the use of loan funds and assets formed from loan funds of the guaranteed party to ensure the use of funds and assets formed from loans for the intended purpose as committed in the credit contract.

- Refuse to perform guarantee obligations in the following cases:

+  The  guarantee  recipient  fails  to  inspect  and  supervise  according  to  the  guarantor's  regulations  on  the  use  of  loan  funds,  and  assets  formed  from  loans  are  not  used  for  the  purposes  stated  in  the  credit  contract  of  the  guaranteed  party.

+  The  guarantee  recipient  has  not  fully  implemented  the  contents  of  the  guarantee  certificate.

-  Request  the  guaranteed  party  to  assume  mandatory  debt  and  repay  the  entire  amount  the  National  Science  and  Technology  Development  Fund    has  paid  (including  principal  and  interest),  and  handle  the  collateral  for  the  guarantee  according  to  regulations.

-  Sue  as  per  the  law  if  the  guaranteed  party  breaches  the  committed  obligations.

2. The guarantor in Vietnam has the obligation to:

- Fulfill the guarantee obligations as per the guarantee certificate.

- Fully return the collateral and related documents to the guaranteed party when the guarantee contract is liquidated.

- Transfer the right to receive and handle collateral to the guarantee recipient when the guarantor refuses to perform guarantee obligations.

- Provide information, and report periodically or unexpectedly about the loan guarantee situation to the National Science and Technology Development Fund.

More details can be found in Circular 06/2011/TT-BKHCN, effective from July 01, 2011.

Thuy Tram

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