Vietnam: Issues regarding transfer or assignment according to Decree No. 91/2018/ND-CP

According to Decree No. 91/2018/ND-CP of Vietnam’s Government, transfer or assignment is divided into 03 cases as follows:

Transfer or assignment of a government-guaranteed loan or bond issue

- According to Vietnam’s regulations, the transfer or assignment of a government-guaranteed loan or bond issue made by the obligee requires the approval by the Ministry of Finance. The Ministry of Finance shall only consider approving an application for transfer or assignment of a government-guaranteed loan if such transfer or assignment does not result in an increase in obligations of the guarantor.

- Within 30 days as from the receipt of a valid application for transfer or assignment submitted by the obligee, the Ministry of Finance shall give a written response to approve or refuse the application which includes the following documents:

+ The original application form for transfer or assignment of a loan, which is made by the obligee and includes the following contents: reasons for transfer or assignment, details of the transferee or assignee, and certification that the transfer or assignment shall not result in any increase in obligations of the guarantor;

+ The original written approval for the transfer or assignment of the loan made by the obligor;

+ The draft agreement on transfer or assignment of a loan (if any), which has been discussed and agreed upon by the parties, and includes provisions that the transferee or assignee of the loan shall inherit all obligations and responsibilities of the obligee previously defined in the loan agreement.

- Any transfer or assignment of a government-guaranteed loan under a loan agreement made by the obligor must be given the approval by the Prime Minister (unless such transfer or assignment is requested by the Government or the Prime Minister). The transferee or assignee must meet all eligibility requirements to be satisfied by an obligor in accordance with applicable laws and regulations herein.

- Within 30 days from the receipt of a valid application for transfer or assignment of a government-guaranteed loan under a loan agreement submitted by the obligor, the Ministry of Finance shall report to the Prime Minister to give approval or refusal to such application. Such application includes:

+ The original scheme for transfer or assignment of a government-guaranteed loan, which indicates: name of the transferee or assignee; reasons of the transfer or assignment; capacity of the transferee or assignee; etc.;

+ The certified copies of financial statements for the last 03 years of the transferee or the assignee, which have been verified by the State Audit Office or an independent audit firm;

+ The original commitment made by the transferee or assignee to inherit all obligations to the transferred or assigned government-guaranteed loan in proportion to the scope of transfer or assignment received from the obligor;

+ The certified copy of the written approval for the loan transfer or assignment made by the obligee.

The Ministry of Finance shall, within 05 working days from the receipt of the Prime Minister’s guidance, give a written response to the obligor.

- Guaranteed corporate bonds registered and deposited at Vietnam Securities Depository, and listed at the Stock Exchanges of Vietnam shall be traded in accordance with applicable law regulations on securities trading.

Transfer or assignment of shares or stakes

The parent company, capital contributors in the list of shareholders holding 65% in the aggregate of charter capital of a joint stock company, or capital contributors of a limited liability company of the obligor as committed and registered with the Ministry of Finance before the issuance of government guarantee may transfer or assign their stakes only when such transfer or assignment is given an approval by the Prime Minister.

The Ministry of Finance shall consider and submit a report to the Prime Minister for giving approval for the transfer or assignment of shares or stakes by an organization or individual specified above within 15 working days if the transferee or assignee has a financial health which is strong as the transferor or assignor and upon the receipt of adequate documents as follows:

+ The original application for transfer or assignment, which is made by the obligor and includes the following contents: name of the transferor or assignor, name of the transferee or assignee, and reasons for transfer or assignment;

+ The certified copies of documents proving the transferee or assignee's financial health;

+ The certified copies of the financial statements for the last 03 years of the transferee or assignee, which have been audited by the State Audit Office or an independent audit firm;

+ The original written commitment made by the transferee or assignee to inherit all responsibilities and obligations of the transferor or assignor in proportion with the transferred or assigned shares or stakes;

+ The certified copy of the obligee’s written approval for the transfer or assignment of shares of stakes.

- The obligor that is a state-owned enterprise conducting the equitization must report and obtain an approval from the Ministry of Finance for its plan for equitization and settlement of government-guaranteed loans before submitting the equitization plan to a competent authority for approval.

- The obligor must obtain a written approval from the Ministry of Finance before transferring partial or entire shares from Vietnamese shareholders to foreign strategic shareholders.

- The obligor must submit report to the Ministry of Finance on estimated time and place of listing before carrying out procedures for listing securities on stock market in accordance with applicable law regulations on securities.

- Where the transfer or assignment of shares or stakes made by the obligor does not result in any changes in the borrower of a loan agreement, the obligor shall still discharge all obligations towards the government-guaranteed loan in conformity with the commitments specified in the loan agreement, the letter of guarantee and other commitments made with the Ministry of Finance.

- Any full or partial division, amalgamation, merger or conversion of business form made by the obligor must be given approval by the obligee (or the lender) and must not cause an increase in the guarantor’s obligations. The obligor must submit a report to the Ministry of Finance in order for submission to the Prime Minister for consideration.

Post-investment transfer or assignment of project and project-associated assets

According to Decree No. 91/2018/ND-CP, the obligor must obtain an approval from the Ministry of Finance before conducting the post-investment transfer or assignment of the project or its associated assets.

- Before conducting any post-investment transfer or assignment of project or its associated assets, which results in changes in the obligor’s rights over the pledged assets, the obligor shall provide other assets as collateral to ensure his/her performance of obligations.

- The parties involved in the transfer or assignment of project or its associated assets shall adjust the mortgage agreement or the contract for mortgage of assets formed in the future and its appendices before conducting such transfer or assignment, and carry out procedures for registration of secured transactions after conducting such transfer or assignment. The transferee or assignee shall inherit all obligations and responsibilities of the obligor towards the collateral in proportion to the scope of transfer.

- The post-investment assignment of assets does not result in changes in the obligor’s obligations towards the Lender and the Ministry of Finance.

Decree No. 91/2018/ND-CP of Vietnam’s Government takes effect from July 01, 2018.

-Thao Uyen-

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