Vietnam’s regulation on credit guarantee contract

According to Decree No. 34/2018/ND-CP of Vietnam’s Government, a credit guarantee contract is entered into by 02 parties (the guarantor and the obligor) or 03 parties (the guarantor, the obligee and the obligor) but it must comply with this Decree.

A credit guarantee contract must at least contain:

- Name and address of the guarantor, the obligor, and the obligee (in case of 3-party contract);

- Location and date of the conclusion of credit guarantee contract;

- Principal and interest repayment obligation;

- Validity period and credit guarantee fees prescribed herein;

- Credit guarantee purposes and clauses;

- Conditions for the guarantor’s securing guarantee obligations;

- Security interests for guarantees;

- Rights, duties and obligations of each party (the guarantor, the obligee and the obligor) during extending of credit guarantee as prescribed herein;

- Agreed terms regarding debt collection methods executed by the obligee after the obligor defaults on the debt or repays insufficient debt to the obligee and methods to prove that the obligee has executed these methods before notifying the guarantor to secure guarantee obligations;

- Specific agreed terms to the case in which the guarantor shall act on behalf of the obligor to repay debts (including interests, time limit);

- Agreed terms regarding settlement of disputes arising during execution of the credit guarantee contract;

- Other relevant agreements required by the credit guarantee fund.

Whenever there is any change to contractual terms and conditions of credit contract, the obligor shall be responsible for notifying the guarantor for consideration and approval of such change. Any amendment and supplement to or termination of the credit guarantee contract must be agreed upon by contracting parties.

The credit guarantee fund shall make forms of credit guarantee contract in accordance with the above regulations and submit them to the President for approval.

Decree No. 34/2018/ND-CP of Vietnam’s Government takes effect from March 08, 2018.

-Thao Uyen-

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