Circular No. 11/2015/TT-NHNN dated August 23, 2015 of the State Bank of Vietnam providing guidelines on handling with loans of agriculture and forestry companies when restructuring, renovating according to the Decree No. 118/2014/ND-CP dated December 17, 2014 of the Government

THE STATE BANK OF VIETNAM

Circular No. 11/2015/TT-NHNN dated August 23, 2015 of the State Bank of Vietnam providing guidelines on handling with loans of agriculture and forestry companies when restructuring, renovating according to the Decree No. 118/2014/ND-CP dated December 17, 2014 of the Government

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010;

Pursuant to the Decree No. 156/2013/ND-CP dated November 11, 2013 of the Governmentdefining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

Pursuant to the Decree No. 118/2014/ND-CP dated December 17, 2014 of the Government onrestructuring, development and improvement of agriculture and forestry companies;

At the proposal of the Director of Department of Credit for all economic sectors;

The State Bank Governor promulgates the Circularproviding guidelines on handling with loans of agriculture and forestry companies when restructuring, renovating according to the Decree No. 118/2014/ND-CP dated December 17, 2014 of the Government.

Article 1. Scope of application and subjects of application

1. Scope of application

This Circular provides guidelines on handling with loans ofagricultureand forestry companies from credit institutions when restructuring and improvement as stipulated under the Decree No. 118/2014/ND-CP dated December 17, 2014 of the Government onrestructuring, development and improvement of agriculture and forestry companies (hereinafter referred to as the Decree No. 118/2014/ND-CP).

2. Subjects of application

a)One-member limited liability companies specialized in agriculture and forestry that are wholly state-owned companies as stipulated under Clause 2, Article 1 of the Decree No. 118/2014/ND-CP;agriculture and forestry companiesthat are wholly state-owned companies as stipulated under Clause 1, Article 26 of the DecreeNo. 118/2014/ND-CP (hereinafter referred to as agriculture and forestry companies);

b) Credit institutions operating as stipulated under the Law No. 47/2010/QH12 on credit institutions dated June 17, 2010;

c) Organizations, households, individuals related to debt settlement of agricultureand forestry companies;

Article 2.Interpretation of terms

In this Circular, these terms below shall be construed as follows:

1. “Time of transformation” means time to finalize accounting books and set up financial statement for the nearest quarter since the plan of restructuring, renovating agriculture and forestry companies is approved by competent agencies.

2.”The plan of restructuring, improvement of agriculture and forestry companies” is the plan of restructuring, improvement of agriculture and forestry companies under the following form: maintaining, improving and developing under the form that are wholly state-owned companies, transformed into Joint Stock Company, Limited Liability Company with two members or more, dissolution of agriculture and forestry companies and transformed into Management Board of protection forest under the mechanism of public service units that produce turnovers.

3. “Loan” includes all loans arising from lending, discounting, finance leasing, factoring, guaranteeing and other credit professions until agriculture and forestry companies process the classification, renovation according to the plan of restructuring, renovating agriculture and forestry companies approved by the competent agencies.

4. “Loan settlement” includes: restructuring payment schedule, exemption and reduction of interest, giving priority to collect the principal first and collect the interest later, selling debts, transferring loans into capital stock and other measure according to regulations under this Circular and other related regulations.

Article 3. Principles of handling with debts

1. Borrowings of agriculture and forestry companies from credit institutions must be secured in the process of restructuring and improvement as stipulated under the Decree N0. 11/2014/ND-CP;

2. Before restructuring, improvement as specified under the plan of restructuring, improvement of agriculture and forestry companies approved by competent agencies, agriculture and forestry companies must capitalize legal sources of capital to settle borrowings to credit institutions or reach an agreement with credit institutions on ways of handling with debts.

3. Time of handling with loans is the time of converting or time after transferring as agreed among credit institutions and agriculture and forestry companies;

4. Credit institutions shall handle with loans for agriculture and forestry companies as stipulated under this Circular and other related regulations.

Article 4. Contrasting and certifying loans

After agriculture and forestry companies receive the decision of competent agencies on restructuring, renovating as stipulated under the Decree No. 118/2014/ND-CP, credit institutions and agriculture and forestry companies shall contrast and certify loans, secured assets in the credit contract, documents on secured assets, receipt for loans and other documents.

Article 5. Handling with loans

1. For agriculture and forestry companies that continue to renovate, develop and restructure according to Article 4, Clause 1, Clause 2 Article 8 of the Decree No. 118/2014/ND-CP:

a) Based on the plan of restructuring, renovating agriculture and forestry companies approved by competent agencies, agriculture and forestry companies shall actively build the feasible repayment project and submit to credit institutions for consideration and decision on restructuring repayment terms, exemption and reduction or giving priority in collecting the principal first and collecting the interest later.

b) If the mutual agreement on handling with loans as stipulated under Point a Clause 1 of this Article can’t be reached, credit institutions shall implement measures to handle with loans as stipulated by current regulations.

2. For agriculture and forestry companies converted into Joint Stock Company, Limited Liability Company from two members or more, Management Board of protection forest according to Article 5, Article 6, Clause 3 Article 8, Article 9, Article 10 of the Decree No. 118/2014/ND-CP:

a) Before transforming according to the plan of restructuring and renovating agriculture and forestry companies approved by competent agencies, agriculture and forestry companies shall fully pay loans for credit institutions or reach an agreement with credit institutions on the plan of transferring loans from agriculture and forestry companies into Management Board of protection forest, Joint Stock Company, Limit Liability Company from two members or more set up from restructuring, renovating agriculture and forestry companies. The plan for transferring loans must be written down, of which clearly specifies the time of transferring, value of loans, secured assets, rights and obligations of parties after loans are transferred.

b) Transferring loans

(i) Transferring loans shall be included in writing based on the following documents:

+ Legal documents of Management Board of protection forest, Joint Stock Company, Limit Liability Company from two members or more that are converted from agriculture and forestry companies include documents of competent agencies on converting forms of business ownership; registration business license or enterprise registration certificate; decision on appointing managerial positions and other documents;

+ Credit contract; liability certificate of agriculture and forestry companies at credit institutions;

+ Contrasting minute and certification of loans;

+ Documents on secured assets of loans;

+ Other documents;

(ii) Credit institutions and Management Board of protection forest, Joint Stock Company, Limited Liability Company from two members or more sign credit contract (or appendix of credit contract), Certification of transferred loans. Loan term, repayment term, interest rate, secure mechanism, methods of payment shall be implemented according to agreements among credit institutions and Management Board of protection forest, Joint Stock Company, Limited Liability Company form two members or more in accordance with current regulations.

(iii) Credit institutions shall consider, decide on restructuring loan term, exemption, reduction of interest, collecting the principal first and collecting the interest later for Management Board of protection forest, Joint Stock Company, Limited Liability Company form two members or more in accordance with current regulations.

(iv) Management Board of protection forest, Joint Stock Company, Limited Liability Company form two members or more shall implement obligations related to transferred loans;

c) Transferring loans into capital stock

Credit institutions shall agree with agriculture and forestry companies to transfer loans into capital stock (for equitized agriculture and forestry companies), capital stock (for agriculture and forestry companies converted into Limited Liability Company from two members or more). Capital contribution, purchasing shares of credit institutions shall be implemented according to the law on Credit Institutions and regulations of the Vietnam State Bank.

3. For agriculture and forestry companies dissolving as stipulated under Article 7 and Article 11 of the Decree No. 118/2014/ND-CP:

a) Agriculture and forestry companies must fully pay loans for credit institutions before dissolution;

b) If agriculture and forestry companies can’t afford to pay loans and there are no assets, credit institutions shall report to the State Bank of Vietnam in writing, the State Bank shall assume the prime responsibility of, and coordinate with the Ministry of Finance to submit to the Prime Minister for consideration and settlement for each specific case.

4. Credit institutions shall coordinate with agriculture and forestry companies to handle with debts under the form of selling debts to organizations, individuals that have functions of purchasing debts according to current regulations.

Article 6. Handling with loans for land of agriculture and forest companies that are managed by the local, assets formed with loans from credit institutions

If agriculture and forestry companies hand over the land for the local to manage as stipulated under Article 15 of the Decree No. 118/2014/ND-CP and assets are formed with loans from credit institutions, handling with loans shall be implemented as follows:

1. Agriculture and forestry companies shall determine the value of assets formed from a part or entire of loans from credit institutions (assets formed from loans) at the time of handing over as a basis to determine the loans (principal and interest) equivalent to the value formed from loans. The determination of value of assets formed from loans shall be done according to current regulations.

2. Handing over assets formed from loans must be written down with signatures of parties: agriculture and forestry companies, organizations, households, individuals and credit institutions. The minute should clearly mention types of assets, value of assets formed from loans, equivalent amount (principal and interest), commitment and responsibilities of parties. IF the value of loans handed over for organizations, households, individuals is smaller than value of loans of agriculture and forestry companies from credit institutions, agriculture and forestry companies shall pay the difference for credit institutions.

3. Credit institutions and organizations, households, individuals shall hand over credit contract of loans. Time for loans, payment term, interest rate, guarantee mechanism, methods of payment shall be implemented according to agreements of parties in accordance with the current regulations.

Article 7. Debt classification and handling with risks

1. Credit institutions shall consider, decide on restructuring of payment schedule and keep the groups of debts as classified before restructuring payment schedule for loans arising before agriculture and forest companies are restructured and renovated as according to the Decree No. 118/2014/ND-CP.

2. Restructuring of payment schedule and keeping the groups of debts as classified before restructuring payment schedule for loans as stipulated under Clause 1 of this Article shall be only done once and it will last for two years since agriculture and forestry companies are improved, developed and restructured according to Article 4, Clause 1, Clause 2 of Article 8 under the Decree No. 118/2014/ND-CP or are transferred into Management Board of protection forests, Joint Stock Company, Limited Liability Companies with more than two members according to the Decision of competent agencies;

3. Credit institutions must frequently review, evaluate debt service ratio of agriculture and forestry companies after rescheduling payment terms and keeping loans group unchanged. Loans are rescheduled payment terms and loans group is kept unchanged as stipulated under this Circular but agriculture and forestry companies can’t pay loans when they are due, credit institutions shall classify and handle with loans as stipulated by the law on classification of assets, risk provisioning levels and use of provisions for handling risks in operation of credit institutions.

4. Beside cases as stipulated under Clause 1 of this Article, classification, risk provisioning level and use of provisions for handling risks for agriculture and forestry companies, Management Board of protection forest, Joint Stock Company, Limit Liability Companies with more than two members set up from restructuring, renovating agriculture and forestry companies shall be implemented according to the law on classification of assets, risk provisioning levels and methods and use of provisions for handling risks in operations of credit institutions;

Article 8. Responsibilities of agriculture and forestry companies and organizations, households, individuals receiving the transfer of loans

1. Agriculture and forestry companies must provide and take responsibility before the law for the accuracy of information, documents provided for credit institutions to contrast, confirm, handle with loans in the process of restructuring, renovating; fulfill obligations of paying debts for credit institutions.

2. Management Board of protection forest, Joint Stock Company, Limited Liability Company from more than two members and organizations, households, individuals receiving the transfer of debts must fulfill obligations of paying debts for credit institutions.

Article 9. Responsibilities of credit institutions

1. To examine, review agriculture and forestry companies under the list of companies that need restructuring and renovating to handle with loans as stipulated under this Circular and other current regulations.

2. To supervise, manage loans for agriculture and forestry companies before and after restructuring and renovating.

3. To actively examine, review the list of agriculture and forestry companies under the list of companies that need restructuring and renovating according to the Decree No. 118/2014/ND-CP to coordinate in handling with loans as stipulated;

4. To report to the State Bank (Department of Credit for all economic sectors) quarterly no later than the tenth of the first month of the beginning quarter since Quarter IV/2015 on results of handling with loans for agriculture and forestry companies according to the appendix attached together with this Circular;

Article 10. Responsibilities of units of the State Bank

1. Department of Credit for all economic sectors:

a) To assume the prime responsibility of, and coordinate with the Department of Monetary Policy,Banking Inspection and Supervision Departmentin consulting the State Bank Governor on handling with arising problems in the process of implementing this Circular;

b) To quarterly summarize, report to the State Bank Governor results on handling with loans for agriculture and forestry companies as stipulated under this Circular;

2. Department of Monetary Policy:

To coordinate with the Department of Credit for all economic sectors and related agencies to handle with arising problems in the process of implementing this Circular.

3. Banking Inspection and Supervision Department:

a) To inspect, supervise on handling with debts of credit institutions for agriculture and forestry companies as stipulated under this Circular;

b) To coordinate with the Director of Department of Credit for all economic sectors and related units on handling with arising problems in the process of implementing this Circular.

4. The State Bank in provinces andcities under the Central Government’s management shall supervise and coordinate to handle with arising problems in the process of implementing this Circular.

Article 11. Organization of implementation

1. This Circular takes effect on October 05, 2015 and replaces the Circular No. 02/2005/TT-NHNN dated April 11, 2005 of the Vietnam State Bank on providing guidelines for handing over and receiving debts of organizations, households, and individuals that take over assets formed with loans from credit institutions in the process of restructuring, renovating and developing state-owned farms and plantations.

2. Debts of agriculture and forestry companies that implement restructuring, renovating according to the Decree No. 118/2014/ND-CP which are handled by credit institutions before the effective day of this Circular shall continue to implement as agreed among credit institutions and agriculture and forestry companies. Amendments, supplements of those above agreements shall be only implemented when contents of amendments, supplements are in accordance with regulations under this Circular.

3. The Head of Office, the Directorof Department of Credit for all economic sectors andHead of units of the State Bank, Managers of State Bank Branches in provinces, cities under the Central Government’s management,Chief of the Board of Members,Chairman of the Board ofManagement, General Manager (Manager) ofcredit institutions, organizations and individuals shallbe responsible for the implementation ofthis Circular.

For the Governor

Deputy Governor

NguyenDong Tien