Application for issuance of guarantee in Vietnam

Application for issuance of guarantee in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Application for issuance of guarantee in Vietnam

Application for issuance of guarantee under Article 14 of Circular 11/2022/TT-NHNN is as follows:

- An application for issuance of guarantee shall, inter alia, include the following primary documents:

+ The application form;

+ Documents about customers;

+ Documents on guaranteed obligations;

+ Documents on security (if any);

+ Documents about other related parties (if any).

- Based on the actual status of guarantee operations of each credit institution or FBB and specific characteristics of each customer group, each method of issuing guarantee (traditional method or e-guarantee method), the credit institution or FBB shall provide specific guidelines on documents to be submitted to the credit institution or FBB for their consideration and issuance of guarantee.

2. Guarantee issuance agreement in Vietnam

Guarantee issuance agreement under Article 15 of Circular 11/2022/TT-NHNN is as follows:

- In order to issue guarantee to a customer, the credit institution or FBB and the customer are required to enter into a guarantee issuance agreement. If the guarantee is issued on the basis of a counter guarantee, the guarantor shall not be obliged to enter into the guarantee issuance agreement with the counter-guarantor.

- A guarantee issuance agreement shall have the following contents:

+ Applicable laws. Where no applicable laws is specified, this means that the parties have agreed to apply the law of Vietnam;

+ Information about the parties of the guarantee relationship;

+ Guaranteed obligations;

+ Guarantee sum and currency;

+ Form of guarantee commitment issuance;

+ Conditions for fulfillment of guarantee obligations;

+ Rights and obligations of the parties;

+ Guarantee service fee;

+Agreement on debt incurrence, interest rate charged on the sum paid and obligation to repay the debt when guarantee obligations are required to be fulfilled;

+ Reference number, signing date and validity period of the guarantee issuance agreement;

+ Dispute settlement;

+ Other contents which must not be contrary to regulations of law.

- Any modification or annulment of contents of the guarantee issuance agreement shall be agreed upon and decided by relevant parties in compliance with regulations of law.

3. Guarantee service fee in Vietnam

According to Article 19 of Circular 11/2022/TT-NHNN, the guarantee service fee is as follows:

- Credit institutions and FBBs shall reach agreement on guarantee service fees with customers and relevant parties (if any). In case of counter guarantee or guarantee confirmation, the guarantee service fee shall be agreed upon by the parties.

- In case of co-guarantee, the parties involved in the co-guarantee shall reach an agreement on the guarantee service fee paid to each party.

- If a guarantee is issued for a joint obligation, the credit institution or FBB shall reach agreement with each customer on the fee amount paid on the basis of the equivalent joint obligation of each customer, unless otherwise agreed upon by the parties.

- If the guarantee currency is a foreign currency, the parties shall reach an agreement whether the guarantee service fee is paid in that foreign currency or must be converted into VND at the selling rate quoted by the guarantor at the fee collection or fee collection notification date.

- Parties may reach an agreement on adjustment of the guarantee service fee.

4. Validity period of guarantee commitment and guarantee issuance agreement in Vietnam

Validity period of guarantee commitment and guarantee issuance agreement under Article 20 of Circular 11/2022/TT-NHNN is as follows:

- The validity period of a guarantee commitment shall last from or after the issue date of the guarantee commitment as agreed upon between the parties until the guarantee obligations are terminated as prescribed in Article 23 of Circular 11/2022/TT-NHNN.

- The validity period of a guarantee issuance agreement shall be agreed upon by the parties but shall not be shorter than that of the guarantee commitment.

- If the expiry date of a guarantee commitment or guarantee issuance agreement falls on weekly days-off or public holidays, it shall be extended to the following working day.

- The extension of the validity period of a guarantee commitment or guarantee issuance agreement shall be agreed upon by the parties in conformity with regulations of law.

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