Decree No. 91/2018/ND-CP dated June 26, 2018 of the Government on government guarantee issuance and management

THE GOVERNMENT

Decree No. 91/2018/ND-CP dated June 26, 2018 of the Government on government guarantee issuance and management

Pursuant to the Law on organization of the Government dated June 19, 2015;

Pursuant to the Law on state budget dated June 25, 2015;

Pursuant to the Law on investment dated November 26, 2014;

Pursuant to the Law on public investment dated June 18, 2014;

Pursuant to the Law on credit institutions dated June 16, 2010;

Pursuant to the Law on public debt management dated November 23, 2017;

At the request of the Minister of Finance;

The Government promulgates a Decree regarding government guarantee issuance and management.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Decree deals with the issuance and management of government guarantees, including:

1. Appraisal, approval and issuance of government guarantees.

2. Management of government guarantees.

3. Responsibility of authorities, organizations and individuals involved in issuing and managing government guarantees.

Article 2. Subjects of application

This Decree applies to:

1. The obligor.

2. The guarantor.

3. The obligee.

4. Regulatory authorities, organizations and individuals involved in issuing and managing government guarantees.

Article 3. Interpretation of terms

For the purposes of this Decree, these terms, in addition to the terms interpreted in the Law on public debt management, are construed as below:

1. “Preferential credit programs” refer to capital mobilization, lending and debt restructuring programs provided by banks for social policies, including Vietnam Development Bank and Vietnam Bank for Social Policies, in accordance with applicable laws.

2. “Recipient of documents in legal proceedings” refers to an organization authorized to receive and certify the receipt of documents of legal proceedings against a letter of guarantee issued by the Government, and forward all those documents to the Ministry of Finance.

3. “Debt-to-equity ratio” means an enterprise’s total debt (including short-term debts and long-term debts) to total equity.

4. “Quick ratio” is an indicator measuring an enterprise’s ability to meet its short-term obligations, and calculated by dividing its current assets by its current liabilities.

5. “Long-term debt coverage ratio” is an indicator measuring an enterprise’s ability to meet its long-term obligations, and calculated by dividing its long-term assets by its long-term liabilities.

6. “Average DSCR within 05 first years” is an average of debt-service coverage ratios within the first 05 years after a project is put into operation according to its cash flow statement.

7. “Serving Bank” refers to the bank where the obligor, that is an enterprise, opens a Project Account, foreign borrowing account or foreign debt repayment account, and performs obligations related to funding withdrawal, debt repayment and collateral of a project using loans guaranteed by the Government.

8. “Payment obligations” mean amounts payable, including principals and interests as defined in a specific loan agreement, or bonds issued under the Government’s guarantee, and specified in the Letter of guarantee.

9. “Guarantor” refers to the Government whose official representative is the Ministry of Finance, also called as the giver of a guarantee as prescribed in Clause 1 Article 48 of the Law on public debt management.

10. “Obligee” refers to a person who acts as the beneficiary of the Letter of guarantee issued by the Ministry of Finance on behalf of the Government. The obligee may be a lender, or a bondholder, or their assignee or transferee, and is called as the Lender in loan agreements or bond issuance agreements.

11. “Obligor’s assignee or transferee” refers to an entity that receives entire or partial rights and obligations of the obligor through the transfer of a government-guaranteed loan, or a quantity of government-guaranteed bonds, performed with the approval by both the guarantor and the obligee.

12. “Bond issuance” refers to an issuance of debt instrument in domestic market by companies or state-owned banks for social policies in local currency.

13. “Project Account” means an account in VND which is opened by the obligor at the Serving Bank and registered in writing with the Ministry of Finance.

14. “Letter of guarantee” refers to a document concerning the government guarantee issued in the form of a letter of guarantee, guarantee contract or written commitment.

Article 4. Entities of government guarantees

The entities prescribed in Article 41 of the Law on public debt management are eligible for government guarantee if they satisfy all of the requirements specified in Article 5 herein.

Article 5. Eligibility requirements for a government guarantee

1. An enterprise wishing to get a government guarantee for executing an investment project is required to satisfy all requirements specified in Clause 1 Article 43 of the Law on public debt management. To be specific:

a) It must have a legal status, is duly established under the law of Vietnam and has been continuously operating for at least 03 years before the date of submission of an application for approval for its proposal for government guarantee or an application for issuance of government guarantee;

b) It has not incurred any loss for the last 03 consecutive years according to the auditor’s report, except the loss incurred during the implementation of state policies as approved by a competent authority;

c) It has no overdue debt at the date of application for a government guarantee, including overdue debts owed to institutions under on-lending agreements as laid down in Clause 2 Article 33 of the Law on public debt management, overdue debts owed to the Accumulation Fund for Debt Payment, overdue debts owed to lenders of government-guaranteed loans, and those owed to other credit institutions.

d) It has a feasible financial plan which has been duly appraised and submitted by the Ministry of Finance to the Prime Minister for approval as prescribed in Clause 1 Article 15 and Clause 1 Article 20 herein;

dd) Its ratio of owner’s equity to total investment of the project is at least 20% as approved by a competent authority, accompanied by the plan for allocation of owner’s equity according to the progress of the project;

e) In case of bond issuance, the enterprise is also required to meet eligibility requirements for public offering of bonds in accordance with applicable law regulations on securities and securities market.

2. A state bank for social policies wishing to get a government guarantee for implementing preferential credit programs must fulfill the eligibility requirements laid down in Clause 2 Article 43 of the Law on public debt management.

Article 6. Guaranteed amounts

1. With regard to a project of which the investment policy is approved by the National Assembly, or the Government, the guaranteed amount equals the loan principal, or the price of bonds issued, but does not exceed 70% of total investment as defined in the investment decision issued by a competent authority.

2. With regard to a project in which investment is decided by the Prime Minister, the guaranteed amount equals the loan principal, or the price of bonds issued, but does not exceed 60% of total investment specified in the investment decision.

3. The maximum guaranteed amount for bonds issued by a bank for social policies is 100% of the limit on quantity of government-guaranteed bonds issued with the approval by the Prime Minister under regulations in Article 48 herein.

Article 7. Letter of guarantee

1. Letters of guarantee are issued and managed by the Ministry of Finance on behalf of the Government. The Ministry of Finance takes charge of issuing Letters of guarantee but Letters of re-guarantee.

2. The only letter of guarantee is issued for each loan, or each bond issue, and specifies a guaranteed amount not exceeding the guarantee limit estimated for such loan or bond issue as approved by the Prime Minister. With regard to banks for social policies, the Ministry of Finance shall certify the guaranteed obligations for each quarter according to the quantity of bonds actually issued.

3. The Ministry of Finance issues a specific document to amend or modify a letter of guarantee as prescribed in Article 26 herein.

4. Main contents of a letter of guarantee:

a) The guarantor;

b) The obligor;

c) Reference contents about the related commercial contract or loan agreement, or information concerning the quantity of guaranteed bonds (if any);

d) Borrowed amount and currency of the guaranteed loan;

dd) The Ministry of Finance’s commitment to the obligee to fulfill its obligations and those of the obligor;

e) Rights, benefits and responsibilities of the obligee;

g) Effect and revocation of a letter of guarantee;

h) Governing laws and in-charge authority, location and language used in solving disputes;

i) Place and date of signing the letter of guarantee.

5. A letter of guarantee may contain other agreements made by the concerned parties in conformity with regulations of Vietnam law.

6. A letter of guarantee becomes effective from the date of issue until the obligor, or the guarantor, fulfills all of payment obligations towards the obligee according to terms and conditions specified in the loan agreement, or terms and conditions of government-guaranteed bonds.

Article 8. Government guarantee limits

1. Government guarantee limits are determined for enterprises and state banks for social policies for a 05-year period or every year.

2. The Ministry of Finance shall take charge of determining specific limits on government guarantees in the 05-year and annual plans for public borrowing and debt repayment, which must be submitted to competent authorities for considering approval in accordance with regulations of the Law on public debt management.

Article 9. Five-year government guarantee limit

1. The 05-year government guarantee limit is an indicator of the 05-year public borrowing and debt repayment plan, established and reported by the Ministry of Finance to the Government for submission to the National Assembly for decision in accordance with regulations in Point b Clause 1 Article 22 of the Law on public debt management.

2. Based on borrowing demands of eligible entities and analysis on public debt safety indicators, objectives of the previous 05-year public borrowing and debt repayment plan, and objectives, public debt safety indicators, orientations and solutions for safe and sustainable management of public debts for the following 05-year period, the Ministry of Finance shall consolidate and set up the 05-year government guarantee limit in conformity with the Government’s 05-year socio – economic development plan.

3. Any enterprise that wishes to apply for a loan or an issuance of government-guaranteed bonds in the following 05-year period for executing its investment project shall submit an application for government guarantee to the Ministry of Finance by June 30 of the fifth year of the previous 05-year period. Such application includes:

a) Name of the investment project;

b) Borrowed amounts for each project (if any);

c) Form of loan (loan or bonds issued);

d) The estimated period for which the government guarantee is applied for and project’s execution period.

4. Every bank for social policies shall, based on its operating strategy approved by the Prime Minister and its implementation of preferential credit programs in the previous 05-year period, submit the plan for issuance of government-guaranteed bonds in the following 05-year period for implementing preferential credit programs to the Ministry of Finance by June 30 of the fifth year of the previous 05-year period. Such plan includes:

a) The report on the implementation of preferential credit programs in the previous 05-year period, credit outstanding balance and annual bad debt ratio;

b) Sources of funding for implementing preferential credit programs, including funding from issuance of government-guaranteed bonds; the issuance and payment of bond principal and interest;

c) The preferential credit growth plan and sources of funding for implementing preferential credit programs, including funding from issuance of government-guaranteed bonds, in the following 05-year period;

d) Estimated quantity of government-guaranteed bonds to be issued, and the plan for payment of bond principal and interest in the following 05-year period.

5. Adjusting the 05-year government guarantee limit is included in the plan for adjustment of public debt safety indicators which is formulated and submitted by the Government to the National Assembly for consideration in conformity with regulations in Clause 6 Article 22 of the Law on public debt management.

Article 10. Annual government guarantee limit

1. The annual government guarantee limit is an indicator of the annual public borrowing and debt repayment plan, established and reported by the Ministry of Finance to the Government for submission to the National Assembly for decision in accordance with regulations in Point b Clause 4 Article 24 of the Law on public debt management.

2. Based on the 05-year government guarantee limit, borrowing demand and fund raising capacity, Ministry of Finance shall establish and submit the limit on government guarantees issued in the planning year to the Government for consideration by November 30 of the year preceding the planning year. This government guarantee limit shall apply in the planning year upon the approval given by the Government.

3. If an enterprise that has the proposal for government guarantee approved by a competent authority under regulations in Article 13 herein wishes to apply for issuance of the government guarantee in the planning year for implementing its investment project, it must submit an application for issuance of government guarantee to the Ministry of Finance by June 30 of the previous year. Such application includes:

a) Name of the investment project;

b) Borrowed amounts or value of the quantity of bonds to be issued under the government guarantee in the planning year and those in the following two years if the project has its proposal for government guarantee approved by the Prime Minister;

c) Reference number and date of the written approval for the proposal for government guarantee;

d) Amounts of money withdrawn or used to pay debts in the planning year and in the following two years, from the loan or the issuance of bonds granted or to be granted government guarantee;

dd) Name of the project for which the proposal for government guarantee has been approved, accompanied by the information specified in Points b, c and d of this Clause, and the issuance of government guarantee in two years following the planning year is applied for.

4. Every bank for social policies shall, based on the Government s planned growth indicator in loan capital for investment and development, capital mobilization plan, lending plan, debt repayment plan and estimated amounts for offsetting interest rate difference, submit an application for issuance of government guarantee to the Ministry of Finance by October 30 of the year preceding the planning year. Such application includes:

a) The planned credit growth in the planning year;

b) The demand for raising and using funds for implementing preferential credit programs in the planning year, including funding from issuance of government-guaranteed bonds;

c) The planned quantity of government-guaranteed bonds to be issued in the planning year.

5. If it needs to modify the application for issuance of government guarantee submitted in the planning year, the obligor must submit a written request for modification, which specifies reasons thereof, to Ministry of Finance.

Chapter II

ISSUANCE OF GOVERNMENT GUARANTEES TO ENTERPRISES FOR IMPLEMENTING INVESTMENT PROJECTS AND MANAGEMENT THEREOF

Section 1. APPRAISAL AND APPROVAL FOR PROPOSALS FOR GOVERNMENT GUARANTEE

Article 11. Application for approval for a proposal for government guarantee

An enterprise applying for an approval for its proposal for government guarantee shall, either directly or by post, submit the following documents to Ministry of Finance:

1. The original application form for approval for the proposal for government guarantee made by the enterprise.

2. The certified copy of the decision on enterprise establishment, or the certificate of enterprise registration of the project owner.

3. The certified copies of documents concerning the investment project, including:

a) The decision on investment proposal or the decision on investment, respectively accompanied by the pre-feasibility study report or the feasibility study report approved by competent authorities; or

b) The certificate of investment registration (if any).

4. The original report made by the enterprise on its operating status and the investment project for which a loan is applied. Such report contains:

a) The enterprise’s general operating status (including the list of shareholders or capital contributors holding at least 5% of the enterprise s charter capital), and its operation in the sector of the project for which the government guarantee is applied;

b) The project’s sources of funding (specify source-based funding amounts and percentage, including the owner’s equity, loan capital or funding from bond issue); capital-contributing progress;

c) The purposes of loan or issuance of bonds;

d) Estimated term of loan or bond issue (time for commencing the repayment of principal and interest), funding withdrawal schedule and the progress of the project;

dd) The plan for use and management of borrowed funds or funds from issued bonds;

e) Plan for allocation of funding for payment of principal, interest and other fees and charges when they mature, including funding from the project’s operating cash flow and alternative sources of funding for debt repayment (if any);

g) Plan for provision of collateral for loan or bond issue guaranteed by the government.

5. The plan for allocation of owner’s equity to the project, which must be at least 20% of total investment of the project, enclosed with the plan for annual allocation of owner’s equity according to the project s progress.

6. The certified copies of the audited financial statements for the last 03 years preceding the year in which the application for appraisal of the proposal for government guarantee is submitted, of:

a) The enterprise applying for approval for the proposal for government guarantee;

b) The parent company of the enterprise that applies for government guarantee, or of shareholders or capital contributors (excluding individual shareholders or capital contributors) holding at least 5% of the owner’s equity of the enterprise that has yet to generate revenue from its business.

In case of an application submitted in the second haft of a fiscal year, the said entities must also submit financial statements for the first six-month period approved by the Management Board, the Member Board or an authorized officer of the relevant enterprise.

Article 12. Appraisal of a proposal for government guarantee

1. The Ministry of Finance shall appraise the enterprise s application for approval for the proposal for government guarantee after the enterprise has submitted all of the documents mentioned in Article 11 herein and before the enterprise negotiates the loan agreement or prepares legal documents for issuance of bond s as regulated.

2. Within 30 days from the receipt of the enterprise’s application including sufficient documents as prescribed herein, the Ministry of Finance shall check the application in terms of the following contents:

a) The validity of documents included in the application;

b) The fulfillment of eligibility requirements for government guarantee as prescribed in Article 41 of the Law on public debt management;

c) The enterprise’s fulfillment of requirements for government guarantee as prescribed in Article 43 of the Law on public debt management and those mentioned herein.

3. If an application fails to meet all of the requirements mentioned in Clause 2 of this Article, the Ministry of Finance shall give a written notification to the enterprise within 45 days from the receipt of a sufficient application.

4. If case of need to collect further information in course of appraising an application, the Ministry of Finance shall take opinions about the project expecting the government guarantee from relevant ministries, ministerial-level agencies and relevant sector regulatory authorities. Relevant authorities must give written opinions within 10 working days from the receipt of written request from the Ministry of Finance.

5. The Ministry of Finance shall submit the report on appraisal results, which includes its proposal to accept or refuse such proposal for government guarantee, to the Prime Minister.

Article 13. Approval for a proposal for government guarantee

1. Based on the appraisal results given by the Ministry of Finance, the Prime Minister shall issue a written approval or refusal to give approval for the proposal for government guarantee according to the Government’s working regulation, and send it to relevant authorities.

2. Within 03 years from the date on which a proposal for government guarantee is given approval, the holder of such approval is required to submit a complete application for issuance of government guarantee as prescribed in Article 14 or Article 19 herein to the Ministry of Finance. Over this period of time, an approval for the proposal for government guarantee shall be no longer valid.

3. The enterprise may use the approved proposal for government guarantee to conduct a negotiation with the lender or formulate the scheme for bond issuance but its application for issuance of government guarantee may be refused if it fails to meet the requirements set forth in Article 5, Article 14 and Article 19 herein.

Section 2. APPRAISAL, APPROVAL AND ISSUANCE OF GOVERNMENT GUARANTEE FOR DOMESTIC AND FOREIGN LOANS

Article 14. Application for issuance of government guarantee for a loan

In addition to the documents required in Article 11 herein, the borrower that applies for government guarantee for his/her loan must, either directly or by post, submit the following documents to the Ministry of Finance:

1. The original copy of the lender’s request for loan guarantee.

2. The original copy of the enterprise’s application form for issuance of government guarantee, which includes details of its expected Serving Bank.

3. The documents mentioned in Article 11 herein if the submitted ones need to be modified.

4. The certified copy of the feasibility study report approved by a competent authority in accordance with regulations of the laws on investment and public investment (in case a prefeasibility study report has been submitted to the Ministry of Finance under regulations in Point a Clause 3 Article 11 herein).

5. The original borrowing plan which must be reviewed within 06 months before applying for issuance of government guarantee, include the contents prescribed in Clause 4 Article 11 herein and the following:

a) The summary of value and terms of the loan for which the government guarantee is applied according to the draft loan agreement initialed by the parties and those of other loans (if any);

b) The master plan for quarterly withdrawal of borrowed fund;

c) The decision, made by the Member Board or the Management Board of the obligor, on the allocation of owner’s equity to the project which must be at least 20% of total investment of the project as approved by a competent authority, enclosed with the plan for annual allocation of owner’s equity according to the project s progress.

6. The original written approval for the borrowing plan granted the government guarantee, made by the agency representing rights and obligations of state capital owner in enterprise (hereinafter referred to as “representative agency”) if the obligor is an enterprise of which 100% charter capital is held by the State.

7. The certified copy of the final draft of the loan agreement initialed by the parties or the signed loan agreement, which specifies the loan amounts and provisions on government guarantee.

8. The certified copies of the audited financial statements for the last 03 years preceding the year in which the application for issuance of government guarantee is submitted as prescribed in Clause 6 Article 11 herein. If the application is submitted in the second half of a fiscal year, the financial statements for the first six-month period must be also submitted.

9. The report given by the National Credit Information Center of Vietnam on the credit status of the enterprise applying for a government guarantee (the written report must bear the seal of the bank providing information).

10. The original written commitment to pay debts if the enterprise applying for the government guarantee defaults, which is made according to the Appendix I enclosed herewith and accompanied with the certification of an authorized person of the parent company, an organization or a person holding at least 65% of the enterprise’s charter capital.

11. The written commitment made by shareholders or capital contributors individually holding at least 5% of the enterprise’s charter capital on their aggregated holding of at least 65% of the enterprise’s charter capital during the validity of government guarantee, enclosed with the list of these shareholders or capital contributors (if the enterprise is a joint-stock company).

12. The documents proving the completion of investment procedures in accordance with regulations of the Law on investment.

Article 15. Appraising an application for issuance of government guarantee for a loan

1. If an application fails to meet all of the requirements mentioned in Clause 14 of this Article, the Ministry of Finance shall give a notification thereof to the obligor within 05 working days from the receipt of the application. The obligor is required to supplement documents to the Ministry of Finance within 10 working days from the receipt of notification.

2. Within 30 days from the receipt of the application including sufficient required documents, the Ministry of Finance shall appraise the received application and submit a report to the Prime Minister on appraisal results including the following contents:

a) The validity of documents included in the application;

b) The fulfillment of eligibility requirements for government guarantee prescribed in Article 41 and Article 43 of the Law on public debt management and those herein;

c) The investment funding structure, including the evaluation of funding sources such as owner’s equity and borrowed fund, and terms and conditions of the loan waiting for the government guarantee;

d) The financial capacity of the enterprise applying for a government guarantee (including the debt-to-equity ratio, quick ratio and long-term debt coverage ratio);

dd) The financial plan of the project using borrowed fund and the enterprise’s solvency. The financial plan is evaluated by analyzing “Debt-service coverage ratio” to determine the average DSCR within 05 first years (which must be not lower than 1.20 for a project with a off-take agreement, or 1.25 for other projects); analyzing the sensitivity by “Debt-service coverage ratio regarding guaranteed loans”; analyzing the sensitivity by “Revenue”; and analyzing the sensitivity by “production costs/ operating costs”;

e) The suitability (in terms of type, nature and value) of the collateral for the government-guaranteed loan;

g) The project’s risks concerning the government-guaranteed loan; risks concerning the loan; risks of the borrower’s financial capacity and solvency; risks of the borrower’s project implementation and management;

h) Total borrowed amounts and the number of government-guaranteed projects implemented by the enterprise up to the date of appraising this application; the enterprise’s outstanding debt the date of appraising this application;

i) The proposed guarantee fee;

k) Other suggestions and proposals.

3. In case the appraisal requires further information, the Ministry of Finance may get opinions about fields of the project from ministries, ministerial-level agencies and relevant sector regulatory authorities, or request the enterprise to supplement documents (such as the approved fundamental design, the off-take agreement, or explanations of technology and equipment). Relevant authorities must give written opinions within 10 working days from the receipt of written request from the Ministry of Finance.

Article 16. Decision on issuance of government guarantee for a loan

1. The Ministry of Finance shall submit contents of the letter of guarantee, accompanied by the report on appraisal results of an application for government guarantee, to the Prime Minister.

2. The Prime Minister shall make a decision on issuance of government guarantee for a loan according to the Government’s working regulation, and send it to relevant authorities. A decision on issuance of government guarantee for a loan includes:

a) Approving contents of the letter of guarantee and authorizing the Ministry of Finance to issue the letter of guarantee;

b) Approving the guarantee fee;

c) Assigning the Ministry of Justice to provide legal opinions as regulated (if any);

d) Assigning the Ministry of Foreign Affairs to coordinate with the Ministry of Finance in appointing a qualified overseas Vietnamese representative mission to act as a recipient of documents in legal proceedings against the letter of guarantee (if any);

dd) Approving other organizations acting as recipients of documents in legal proceedings as regulated in letters of guarantee (if any);

e) Other contents.

Article 17. Issuance of letter of guarantee for a loan

1. Pursuant to the Decision on issuance of government guarantee made by the Prime Minister, the Ministry of Finance shall issue a letter of guarantee to the obligor upon the completion of the following procedures:

a) Enter into a mortgage agreement with the Ministry of Finance in accordance with regulations in Article 31 herein;

b) Provide the Ministry of Finance with the certified copy of the collateral insurance policy;

c) Open a Project Account at the Serving Bank; give a written notification of account number or account opening agreement to the Ministry of Finance;

d) Submit the certified copy of the loan agreement dully signed by the parties to Ministry of Finance;

dd) Provide the Ministry of Finance with information concerning the enterprise’s deposit accounts at credit institutions, supported with the original letters of confirmation thereof given by relevant credit institutions.

2. The letter of guarantee shall be issued within 07 working days from the completion of all procedures mentioned in Clause 1 of this Article. To be specific:

a) With regard to a foreign loan, the letter of guarantee is issued in 04 original copies, among which 01 copy is kept by the Ministry of Finance, 01 copy is delivered to the obligor, 01 copy is sent to the Ministry of Justice, and the other is sent to the lender or the lender’s authorized representative; b) With regard to a domestic loan, the letter of guarantee is issued in 06 original copies, among which 02 copies are kept by the Ministry of Finance, 01 copy is delivered to the obligor, 01 copy is sent to the lender, and the others are sent to relevant authorities.

3. The Ministry of Finance shall decide the number of original copies of the letter of guarantee issued to relevant authorities other than those mentioned in Clause 2 of this Article, if necessary.

Article 18. Procedures relating to validity of a government-guaranteed foreign loan

1. The obligor shall conduct procedures specified in the loan agreement to validate the letter of guarantee and the loan agreement.

2. The obligor shall contact the Ministry of Justice to obtain legal opinions about the letter of guarantee for the government-guaranteed foreign loan.

3. The obligor shall carry out procedures for registration of a foreign loan with the State Bank of Vietnam (SBV) in accordance with the SBV’s regulations on management of foreign loans and debt repayment by enterprises.

4. If legal procedures specified in the foreign loan agreement and the letter of guarantee require recipients of documents in legal proceedings:

a) The obligor shall provide the Ministry of Finance with information concerning organizations authorized as recipients of documents in legal proceedings on behalf of the borrower (also the obligor) and the guarantor (if any) as required in the loan agreement, and ask for opinions from the Ministry of Finance or an approval from the Ministry of Foreign Affairs if such proposed recipient is an overseas representative mission of Vietnam during the negotiation;

b) After entering into the loan agreement and getting the government guarantee, the obligor shall send the letters of authorization made by the borrower (also the obligor) and by the guarantor (if any) to organizations which are authorized as recipients of documents in legal proceedings for certification by signing. The obligor shall send the signed letters of authorization to the obligee and its copies to the Ministry of Finance.

Section 3. APPRAISAL, APPROVAL AND ISSUANCE OF GOVERNMENT GUARANTEE FOR BOND ISSUE

Article 19. Application for a government guarantee for bond issue

In addition to the documents prescribed in Article 11 herein, the enterprise (also the issuer) that applies for government guarantee must provide the Ministry of Finance either directly or by post the following documents:

1. The documents prescribed in Article 11 herein if the submitted ones need to be modified.

2. The enterprise’s original application form for the government guarantee for bond issue.

3. The certified copy of the project’s feasibility study report approved by a competent authority in accordance with regulations of the laws on investment and public investment (in case a prefeasibility study report has been submitted to the Ministry of Finance under regulations in Point a Clause 3 Article 11 herein).

4. The original scheme for bond issuance which must be reviewed within 06 months before applying for the government guarantee, and include the contents prescribed in Clause 4 Article 11 herein and the following contents:

a) The originals or certified copies of the plan for bond issuance specifying date of bond issuance, and the plan for disbursement of funds for the project;

b) The planned quantity of bonds to be issued, sorted by term and issuance date according to the progress of the project and disbursement rate;

c) The decision, made by the Member Board or the Management Board of the obligor, on the allocation of owner’s equity to the project which must be at least 20% of total investment of the project as approved by a competent authority, enclosed with the plan for annual allocation of owner’s equity according to the project s progress.

5. The original written approval for the bond issuance scheme granted the government guarantee, made by the representative agency if the obligor is an enterprise of which 100% charter capital is held by the State.

6. The license for public offering issued by the State Securities Commission of Vietnam.

7. The certified copies of the audited financial statements for the last 03 years preceding the year in which the application for issuance of government guarantee is submitted as prescribed in Clause 6 Article 11 herein.

8. The report given by the National Credit Information Center of Vietnam on the credit status of the obligor (the written report must bear the seal of the bank providing information).

9. The original written commitment to pay debts if the obligor defaults, which is made according to the Appendix I enclosed herewith and accompanied with the certification of an authorized person of the parent company, an organization or a person holding at least 65% of the enterprise’s charter capital.

10. The written commitment made by shareholders or capital contributors individually holding at least 5% of the enterprise’s charter capital on their aggregated holding of at least 65% of the enterprise’s charter capital during the validity of government guarantee, enclosed with the list of these shareholders or capital contributors (if the enterprise is a joint-stock company).

11. The documents supplemented during the appraisal of application for government guarantee for a bond issue (such as the approved fundamental design, the off-take agreement and explanations of technology and equipment).

12. The plan for annual allocation of owner’s equity to the investment project, enclosed with documents proving the enterprise s financial capacity to allocate owner s equity which is at least 20% of total investment of the project.

13. The documents proving the completion of investment procedures in accordance with regulations of the Law on investment.

14. Documents proving the fulfillment of eligibility requirements for issuance of corporate bonds in accordance with the law regulations on issuance of corporate bonds.

Article 20. Appraisal and notification of issuance of corporate bonds

1. The Ministry of Finance shall appraise an application for the government guarantee for an issue of corporate bonds according to contents and procedures applicable to domestic and foreign loans prescribed in Article 15 herein. The Ministry of Finance shall submit contents of the letter of guarantee, accompanied by the report on appraisal results of an application for government guarantee, to the Prime Minister.

2. After the Prime Minister makes a decision on issuance of government guarantee, which includes the contents specified in Article 16 herein, and gives approval for the guarantee limit, the Ministry of Finance shall give a written notification to the obligor of the limit on quantity of guaranteed bonds the enterprise may issue.

3. Based on the Ministry of Finance’s notification of the limit on quantity of guaranteed bonds to be issued as prescribed in Clause 2 of this Article:

a) At least 10 working days before the planned issuance date, the obligor must request the Ministry of Finance in writing to notify the bracket of interest on guaranteed bonds; Such written request must specify the planned issuance date, the planned quantity of bonds to be issued, bond term and issuance method;

b) At least 07 working days from the receipt of the obligor’s request, the Ministry of Finance shall give a written notification of the bracket of bond interest to the obligor.

4. Based on the interest bracket notified by the Ministry of Finance and the market developments at the issuance date, the obligor shall organize the bond issuance, and carry out procedures for registering, depositing, listing and payment for bonds in accordance with applicable law regulations on securities.

Article 21. Issuance of government guarantee for bond issue

1. Pursuant to the Decision on issuance of government guarantee for bond issue made by the Prime Minister, the Ministry of Finance shall issue a letter of guarantee to the obligor upon the completion of the following procedures:

a) Enter into an agreement on mortgage of property for the entire guaranteed quantity of bonds to be issued with the Ministry of Finance in accordance with regulations in Article 31 herein. This mortgage agreement shall be reviewed and modified upon the completion of all bond issues in conformity with the value of guaranteed bonds;

b) Provide the Ministry of Finance with the certified copy of the collateral insurance policy;

c) Open a Project Account at the Serving Bank; give a written notification of Project Account number and existing deposit accounts opened at credit institutions, supported with letters of confirmations of these credit institutions, to the Ministry of Finance;

d) To submit report to the Ministry of Finance within 10 working days from the end of each issue in order to determine the actual guarantor s liability (and issue the letter of guarantee).

2. The letter of guarantee shall be issued after the obligor has fulfilled all procedures specified in Clause 1 of this Article and within 05 working days from the date on which the Ministry of Finance receives the report on each issue. The letter of guarantee is issued for each issue in 05 original copies, among which 02 copies are kept by the Ministry of Finance, 01 copy is delivered to the obligor and the others are sent to relevant authorities.

3. The Ministry of Finance shall decide the number of original copies of the letter of guarantee issued to relevant authorities other than those mentioned in Clause 2 of this Article, if necessary.

Section 4. MANAGEMENT OF GOVERNMENT GUARANTEES ISSUED TO ENTERPRISES

Article 22. Serving Bank

1. The obligor shall select a Serving Bank for the investment project guaranteed by the government and propose it in the application for government guarantee or after the application for government guarantee approved by a competent authority.

2. Serving Bank is a commercial bank that is duly established, operates under the Law on credit institutions of Vietnam, and has a credit rating equal to or one level lower than the sovereign credit rating as assigned by any of the following international credit rating agencies (Moody’s, Standard and Poor’s, Fitch).

3. Rights and obligations of a Serving Bank to manage borrowed funds or funds from issuance of government-guaranteed bonds:

a) Fulfill duties relating to payment, supervision of Project Account, fund withdrawal and debt repayment; manage the collateral of the government-guaranteed loan or bond issue as authorized by the Ministry of Finance; and assume responsibility for the accuracy of certifications given by the Serving Bank;

b) Check the conformity of the obligor’s fund withdrawing documents with the signed commercial contract and loan agreement; send the written certification of documentation conformity to the obligor and the Ministry of Finance within 05 days from the receipt of the obligor’s application for disbursement and before the obligor sends fund withdrawing documents to the lender;

c) Send report to the Ministry of Finance if fund withdrawing documents are not suitable, supported with reasons and solutions thereof;

d) When carrying out foreign exchange transactions concerning the guaranteed foreign loan, the Serving Bank shall consider, verify and keep all relevant documents and vouchers so as to withdraw funds and pay debts for the guaranteed foreign loan in accordance with applicable law regulations;

dd) Manage the Project Account’s balance and send report to the Ministry of Finance on the obligor’s performance of commitment on a basis of every 06 months or when the obligor fails to comply with the commitment; withdraw money from the Project Account to pay debts at the request of the Ministry of Finance if the obligor defaults;

e) Collect service fee from the obligor according to regulations of the Serving Bank and agreements entered into between two parties.

4. Procedures for approving a Serving Bank:

a) After getting an approval for government guarantee from a competent authority, the obligor shall register the Serving Bank with the Ministry of Finance. The application for registration of Serving Bank includes:

- The original application form for approval for Serving Bank made by the obligor;

- The draft agreement made by and between the obligor and the Serving Bank, which indicates obligations of each party in conformity with regulations on responsibilities of the obligor and those of the Serving Bank herein;

- Documentary evidences of the Serving Bank’s eligibility as prescribed in Article 2 of this Article (original or certified copies).

b) The Ministry of Finance shall give a written approval or refusal to approve the Serving Bank to the obligor within 07 working days from the receipt of adequate documents as specified in Point a of this Clause. In case of refusal, reasons for refusal must be specified.

If the application is refused, the obligor must select another Serving Bank which satisfies all of requirements mentioned in Clause 2 of this Article and suggest it to the Ministry of Finance for consideration.

c) If the obligor fails to select a qualified Serving Bank, the Ministry of Finance shall appoint a Serving Bank after consulting the obligor.

5. The obligor is required to submit a report to the Ministry of Finance on change in the Serving Bank and comply with regulations in Points a, b Clause 4 of this Article.

Article 23. Project Account

1. The obligor that implements the investment project using funds from a guaranteed loan shall open a Project Account at a qualified Serving Bank.

2. The Project Account reflects fund withdrawals (except the case where the foreign lender make payment directly to contractors under terms and provisions of the loan agreement or commercial contract), receipt of funds from bond issue, payment of debts (principal, interest and relevant fees); receipt of contributed amounts and revenue from the investment project, other income; revenues and expenses relating the project, and other legal funding sources of the obligor from the date of issuance of letter of guarantee.

3. A Project Account may serve one or several projects guaranteed by the government of an obligor.

4. The obligor must send a report to the Ministry of Finance on change or re-registration of a Project Account.

5. If an enterprise cannot separate its revenue from the investment project using funds from a government guaranteed-loan from that from its business, this matter must be specified in the borrowing plan or scheme for bond issuance when applying for the government guarantee. When submitting report on appraisal results, the Ministry of Finance shall request the Prime Minister to consider allowing supervision of total revenue of the enterprise for ensuring its solvency.

6. In case of a foreign loan guaranteed by the government, upon the issuance of the letter of guarantee, the obligor, besides the Project Account, is required to open a foreign currency account (also the foreign borrowing and debt repayment account) at the Serving Bank, and carry out procedures for registration of such foreign currency account with the Ministry of Finance and the SBV in accordance with applicable law regulations on foreign exchange management. The Serving Bank shall manage and supervise any withdrawals and payments from the foreign borrowing and debt repayment account at the same time as the Project Account.

Article 24. Withdrawal of funds from government-guaranteed loans or bonds

1. The obligor shall issue bonds, or withdraw and use funds from a government-guaranteed loan, and contribute, and allocate the owner’s equity in conformity with the borrowing plan or the scheme for bond issuance given approval by the representative agency (if it is a state-owned enterprise) and a competent authority, and the project progress and plan registered with the Ministry of Finance as well as terms and conditions of the loan agreement and the commercial contract;

2. Before sending a request for withdrawal of funds from a government-guaranteed loan to the lender, the obligor must submit relevant withdrawing documents as specified in the commercial contract or loan agreement to the Serving Bank. The Serving Bank shall check the conformity of such withdrawing documents with purposes of the loan, the signed loan agreement and commercial contract, and then give a written approval or refusal to approve the request for fund withdrawal to the obligor as well as send a copy thereof to the Ministry of Finance. A bond issue shall not be governed by this provision.

3. If the obligor wishes to entirely withdraw and transfer funds from the guaranteed loan or bond issue to the Project Account, the Serving Bank shall check and verify documents and vouchers of any payments using the Project Account under terms and conditions of the commercial contract when receiving the obligor’s remittance request.

4. The obligee (the lender) shall also check the conformity of fund withdrawing documents with the loan purposes before giving approval for disbursement of funds from a government-guaranteed loan and making remittance upon the request of the obligor (the borrower).

Article 25. Management of borrowed funds, funds from issued bonds and others

1. The obligor shall:

a) Manage and use borrowed funds, contributed capital and owner’s equity for the purposes defined in the borrowing plan or the bond issuance scheme;

b) Record and carry out accounting works concerning government-guaranteed loan or bonds in a timely and proper manner in accordance with law regulations.

c) Use the Project Account’s balance to firstly repay the government-guaranteed loan and loans from the Accumulation Fund for Debt Repayment (if any);

d) Commit to transfer revenues and other legal incomes generated from the project s operations to the Project Account in order to ensure funding for repaying debts in full and on schedule;

dd) Commit to maintain the Project Account s balance (in original currency or in VND according to the exchange rate announced by the Serving Bank) as from the first year when payment obligations occur for the purpose of paying debts on schedule. The minimum balance is calculated by adopting the formula stated in the Appendix III enclosed herewith, and 10 days before the following debt payment deadline, it must equal at least total amount payable;

e) Unconditionally and irrevocably authorize the Serving Bank to request credit institutions where the obligor’s deposit accounts are maintained to transfer money from such deposit accounts to the Project Account for ensuring the required minimum balance or paying debts; irrevocably authorize credit institutions where the obligor’s deposit accounts are maintained to transfer money from such deposit accounts to the Serving Bank within 05 days after the date prescribed herein and as specified in the loan agreement;

g) Annually check debt figures with the Ministry of Finance, or send the copy of the annual statement of debt figures, which must be confirmed by the lender, to the Ministry of Finance.

2. The Ministry of Finance shall:

a) Monitor and keep records of the obligor’s withdrawal of funds and repayment of debts related to the government-guaranteed loan on the debt management system of the Ministry of Finance;

b) Check and verify the annual outstanding debt with the obligor and the obligee.

3. The Serving Bank shall:

a) Fulfill duties of the Serving Bank during the process of fund withdrawal and debt repayment of the project;

b) Submit report, on the periodical basis of every six months, to the Ministry of Finance on the balance and changes in the Project Account or other accounts relating the obligor’s fund withdrawal and debt repayment (if any);

c) If the Project Account’s balance is smaller than the required minimum amount, the Serving Bank is entitled to request the obligor to make additional payment, and submit a report thereof to the Ministry of Finance within 03 working days from the date on which the Project Account must has enough required balance as prescribed herein.

Article 26. Modification of a letter of guarantee

1. The Ministry of Finance shall consider modifying the letter of guarantee for the signed loan agreement upon the request of the obligor after adequately receiving following documents:

a) The obligor’s written request for modification of the letter of guarantee, which indicates reasons of modification, contents to be modified, and effects of such modification on the obligor s performance of obligations as defined in the loan agreement;

b) Documents modifying or amending the signed loan agreement;

c) The obligee’s opinions about the modification;

d) The draft of modified letter of guarantee prepared by the obligee (if any).

2. In case contents to be modified of the letter of guarantee cause neither an increase in the principal of the government-guaranteed loan nor change of the obligor, the Prime Minister shall authorize the Minister of Finance to make decision and grant a document or an appendix to modify the letter of guarantee within 15 working days as from the receipt of adequate and valid documents submitted by the obligor as prescribed in Clause 1 of this Article.

3. In case contents to be modified of the letter of guarantee cause either an increase in the principal of the government-guaranteed loan or change of the obligor, the Ministry of Finance shall submit a report thereof to the Prime Minister within 15 working days as from the receipt of adequate and valid documents submitted by the obligor as prescribed in Clause 1 of this Article. The Ministry of Finance shall issue a document or an appendix to modify the letter of guarantee, or give a written refusal of the obligor’s request within 10 working days from the receipt of the Prime Minister’s guidance.

4. Provisions in Clauses 1, 2, 3 of this Article shall not apply to bonds issues for which the government guarantee has been issued by the Ministry of Finance.

Article 27. Guarantee fees

1. Based on the results of appraising the investment project’s financial plan and the enterprise’s financial health, the Ministry of Finance shall determine the guarantee fee which does not exceed 2% per year of total outstanding debt of the guaranteed loan.

2. The government guarantee fee incurred by the enterprise is the sum of:

a) The fee calculated according to the average DSCR within 05 first years of the investment project; and

b) The fee calculated according to the enterprise’s financial health at the time when it submits an application for government guarantee.

3. The government guarantee fees are available in the Fee Schedule of the Appendix II enclosed herewith.

Article 28. Collection and transfer of government guarantee fees

1. The guarantee fee is charged on the outstanding principal amount of the government-guaranteed loan, or bond issue, according to the loan currency and the guarantee fee approved by the Prime Minister as from the date of the first withdrawal of funds or the date of payment of bond buying amounts.

2. The guarantee fee is calculated in the currency of the guaranteed loan and exchanged into VND according to the selling rate officially announced by Vietcombank at the time of payment of guarantee fee; the guarantee fee must be paid to the Accumulation Fund for Debt Repayment on the date of payment of interests on the government-guaranteed loan or bonds.

3. Within 10 days after the payment date prescribed in Clause 2 of this Article, if the Ministry of Finance does not yet receive the payment of guarantee fee, the obligor must incur the late payment interest charged on the unpaid guarantee fee. To be specific:

a) The late payment interest is charged on total days of late payment commencing from the due date to the date on which guarantee fee is paid in full;

b) The interest rate charged on the late payment of guarantee fee is equal to the interest rate charged on the guaranteed loan or bond issue;

c) If the floating interest rate is charged on the loan or bond issue, the late payment interest shall be determined by the Ministry of Finance based on the reference rate applied for the payment period of interests charged on the government-guaranteed loan or bond issue.

Article 29. Use of government guarantee fee

1. The guarantee fees are considered revenues of the Accumulation Fund for Debt Repayment that shall manage and use collected guarantee fees in proper way, including fulfillment of the guarantor s obligations.

2. The Ministry of Finance may use 1.5% of total amount of guarantee fees actually collected to cover expenditures that arise in course of managing government guarantees upon the approval of the Prime Minister.

The Minister of Finance shall decide the use of retained amounts for administrative expenditures to pay costs of hiring independent consultants/ experts when appraising applications for government guarantee, if any.

Article 30. Collateral for a loan or bond issue

1. The enterprise that is the obligor or organizations and individuals involved in the investment project using funds from a government-guaranteed loan must put up assets as the collateral for the Ministry of Finance in accordance with applicable law regulations.

2. Assets provided as collateral for the Ministry of Finance are formed from the borrowed funds, or funds from issuance of guaranteed bonds, other assets formed from the owner’s equity or other legal funding sources of the obligor, or property of organizations and individuals involved in the investment project using funds from a government-guaranteed loan.

3. The collateral value must be equal to at least 120% of the principal of guaranteed loan or bonds, and determined as follows:

a) The value of collateral which is the land-use rights shall be determined according to the land price bracket announced by the People’s Committee of province where the land plot is located in accordance with relevant applicable law regulations;

b) If the collateral is other assets formed from the borrowed funds or funds from issuance of guaranteed bonds, other assets of the obligor or any organizations and individuals involved in the investment project using funds from a government-guaranteed loan: the collateral value is determined according to the book value in conformity with the law regulations, certified by an independent audit firm and approved by the guarantor (the Ministry of Finance);

c) If the collateral is assets which will be formed in future from borrowed funds or funds from issuance of guaranteed bonds: the collateral value equals the agreed price specified in the signed commercial contract concerning the guaranteed loan or bond issue; or equals the actual expenses paid to form the asset according to relevant documents and vouchers approved when preparing project s cost statement.

4. The obligor shall manage and use the collateral in a proper manner. The obligor is not allowed to use the collateral for a guaranteed loan or bond issue to ensure other civil liabilities, except the case mentioned in Clause 4 Article 31 herein.

5. Any sale, exchange or donation of the collateral is not permitted, except the case permitted by the Ministry of Finance. The collateral value shall be re-valuated in accordance with applicable laws. The obligor must provide collateral for ensuring the payment of remaining outstanding debt of the government-guaranteed loan or bond issue under regulations in Clause 3 of this Article before performing the release of previously pledged assets.

6. The obligor shall purchase insurance for the collateral during the term of the guaranteed loan.

7. The Government shall make decision on the pledge of property as collateral for the government-guaranteed loan or bond issue in case where applicable law regulations may not applied, or governing regulations are not available, or the collateral becomes the state-owned property before maturity date of the government-guaranteed loan or bonds, or the guarantee is conducted according to specific guidance of a competent agency.

Article 31. Management of collateral

1. The mortgage agreement for the government-guaranteed loan or bond issue is concluded by and between the obligor and the Ministry of Finance, or its authorized agency, before the Ministry of Finance issues the letter of guarantee. To be specific:

a) The Ministry of Finance, or its authorized agency, and the obligor may enter into one or several mortgage agreements and their appendixes depending on the features of each type of assets put up as collateral so as to ensure the registration of security interests as regulated by law;

b) Where a new asset is formed or the collateral is replaced during a year, an appendix to the mortgage agreement shall signed between the Ministry of Finance, or its authorized agency, and the obligor on the basis of the certification given by an independent audit firm, and shall be made perfect by June 30 of the following year.

2. The obligor shall:

a) Carry out procedures for registration of security interests for the signed mortgage agreement in accordance with the law on registration of security interests;

b) Assume responsibility for the accuracy and adequacy of documents concerning the registration of security interests;

c) Pay any expenses arising during the registration of security interests.

3. The obligor shall carry out procedures for registration of security interests before the Ministry of Finance issues the letter of guarantee. To be specific:

a) Within 30 days after the mortgage agreement has been duly concluded by the parties and notarized or certified in accordance with applicable laws, the obligor shall carry out procedures for registration of security interests;

b) The obligor shall submit the Certificate of registration of security interests, accompanied with the list of pledged assets and other relevant documents as requested, to the Ministry of Finance, or its authorized agency, within 10 days from the date on which it is issued;

c) The appendix to the mortgage agreement for assets formed in the future in a year is signed and notarized or certified in accordance with applicable laws on the basis of the certification given by an independent audit firm, and shall be made perfect by June 30 of the following year;

d) The obligor shall conclude an appendix to the mortgage agreement and register any modification to security interest contents if there is any discrepancy against those provided at the time of security interest registration for assets formed in the future within 30 days after the project cost statement is completed.

4. The Ministry of Finance, or its authorized agency, shall manage the collateral on the basis of:

a) The Certificate of registration of security interests, and the description of assets put up as collateral;

b) The list of assets put up as collateral for the government-guaranteed loan or bond issue, which indicates the value of each asset and is certified by an independent audit firm (whose name appears in the list of accredited audit firms annually announced by the Ministry of Finance).

5. In case the obligor wishes to mortgage a part of the asset formed from the government-guaranteed loan and other funding sources according to the portions of capital creating such asset to a third party:

a) The obligor may only mortgage the asset value in excess of the outstanding debt of the guaranteed loan while all debt obligations must be fulfilled;

b) The obligor must submit a request for the approval from the Ministry of Finance before conducting the mortgage; such request should indicate reasons of the mortgage, value of pledged asset and relevant contents. The Ministry of Finance shall give a written response within 15 working days;

c) The parties involved in the joint mortgage of an asset are required to carry out procedures for registration of security interests in accordance with applicable law regulations.

6. The obligor may replace the current collateral by another asset of equivalent value provided that it must be approved in writing by the Ministry of Finance or its authorized agency.

7. The parties involved in the collateral shall comply with applicable law regulations on secured transactions and registration of security interests.

8. The Ministry of Finance, or its authorized agency, shall keep all original documents concerning the collateral and collateral registration. In case an asset is mortgaged to multiple parties, asset-related original documents shall be kept under agreement between the mortgagees or by an authorized independent organization.

9. The obligor shall manage and keep other original documents concerning the collateral at the request of the Ministry of Finance pr its authorized agency.

10. The mortgage agreement is no longer valid only when the obligor has completed all obligations towards the lender as provided for in the letter of guarantee and towards the Ministry of Finance according to the signed documents relating to the letter of guarantee.

Article 32. Disposal of collateral

1. In case the Ministry of Finance has completed all debt payment obligations for the obligor who defaults and is incapable of paying debts to the Ministry of Finance, the collateral shall be disposed to serve the debt recovery by the Ministry of Finance.

2. The collateral shall be disposed by adopting the method specified in the mortgage agreement and applicable regulations of the law on secured transactions.

3. The Ministry of Finance is allowed to hire an independent organization to supervise and valuate the collateral in case of enforced disposal of collateral as prescribed by law. The obligor shall pay costs of hiring independent organization.

4. In case of multiple mortgagees as prescribed in Clause 4 Article 31 herein, the Ministry of Finance and relevant parties shall reach an agreement on the method of collateral disposal. The disposal of the asset value mortgaged to the Ministry of Finance must be reported to the Prime Minister for consideration.

5. Proceeds from disposal of the collateral shall be transferred to the Accumulation Fund for Debt Repayment to finance the payment of debts concerning government-guaranteed loans.

Article 33. Mortgage cancellation and termination

1. Cancellation and termination of a mortgage agreement which is made to ensure the fulfillment of payment obligations for a government-guaranteed loan or bond issue shall be carried out in accordance with applicable law regulations.

2. The Prime Minister shall decide the cancellation or termination of a mortgage agreement in case such mortgage is no longer valid as regulated by the law on secured transactions or the collateral for a guaranteed loan or bond issue becomes the state-owned property.

Article 34. Transfer or assignment of a government-guaranteed loan or bond issue

1. 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.

2. 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:

a) 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;

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

c) 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.

3. 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.

4. Within 30 days as 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:

a) 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; the plan for project’s operations made by the transferee or assignee; evidence of the transferee or assignee’s solvency to pay remaining outstanding debt of the loan;

c) 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;

c) 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;

d) 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.

5. 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.

Article 35. Transfer or assignment of shares or stakes

1. 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.

2. 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 in Clause 1 of this Article 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:

a) 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;
b) The certified copies of documents proving the transferee or assignee s financial health;

c) 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;

d) 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;

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

3. 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.

4. 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.

5. 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.

6. 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.

7. 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.

Article 36. Post-investment transfer or assignment of project and project-associated assets

1. The obligor must obtain an approval from the Ministry of Finance before conducting the post-investment transfer or assignment of project or its associated assets.

2. 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.

3. 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 appendixes 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.

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

Article 37. Preventive measures against risks

1. The Ministry of Finance shall periodically classify and consolidate debts of government-guaranteed loans or bond issues into the debt classification table of the program for management of public debt risks on the basis of the obligor s fulfillment of debt payment obligations as follows:

a) Group 1: Loan or bond issue of which debts are paid in full and on schedule;

b) Group 2: Loan or bond issue of which debts (interest or principal, or both principal and interest) are paid with money borrowed from the Accumulation Fund for Debt Repayment for 01-03 repayment terms, and there is no outstanding debt owed to the Accumulation Fund for Debt Repayment;

c) Group 3: Loan or bond issue of which debts are paid with money borrowed from the Accumulation Fund for Debt Repayment for 01-03 repayment terms, and there is an undue outstanding debt owed to the Accumulation Fund for Debt Repayment;

d) Group 4: Loan or bond issue of which debts are paid with money borrowed from the Accumulation Fund for Debt Repayment for more than 03 repayment terms, and there is an overdue debt owed to the Accumulation Fund for Debt Repayment;

dd) Group 5: Loan or bond issue of which debts owed to the Accumulation Fund for Debt Repayment cannot be collected or are unlikely recoverable.

2. An obligor whose debt is classified in group 3, group 4 or group 5 must bear the financial supervision of the Serving Bank in terms of Project Account’s monthly cash flow so as to manage risks.

3. The obligor shall implement measures for preventing risks such as setting aside of provisions for risks, formulation and selection of suitable risks handling plans and instruments, and purchase of credit risk insurance.

4. The obligor shall bear the inspection by competent authorities with the aims of risk prevention and during the process of handling risks.

Article 38. Methods for handling risks

1. The Ministry of Finance shall adopt the following risk management methods:

a) Not to consider issuing guarantee to an obligor who has outstanding debts with the Accumulation Fund for Debt Repayment, or a parent company whose subsidiary has debts classified in group 4 or group 5 as prescribed in Clause 1 Article 37 herein until debts owed to the Accumulation Fund for Debt Repayment and debts of government-guaranteed loans have been fully paid;

b) Exercise rights to dispose the collateral and collect debts from obligors as regulated herein so as to collect debts in full;

c) Suspend the issuance of bonds by an enterprise that fails to comply with the bond issuance plan approved by the Prime Minister and the bond issuance notice granted by the Ministry of Finance; or adopts an interest rate exceeding the interest bracket announced by the Ministry of Finance; or issues bonds in excess of the limit approved by the Prime Minister.

2. The following risk management methods shall apply to obligors having debts classified in group 4 or group 5:

a) Group-4 debts: The obligor must submit monthly report to the Ministry of Finance and its governing body (if any) on the enterprise’s cash flows;

b) Group-5 debts: The obligor shall formulate the debt restructuring scheme and adopt methods for handling debts upon the approval by the Prime Minister, including the disposal of collateral (if any) for debt recovery.

3. The Accumulation Fund for Debt Repayment shall annually make plan for and set aside provisions from collected guarantee fees for repayment of debts of government-guaranteed loans classified in group 4 or group 5 in the principle of ensuring that the minimum balance of the Accumulation Fund for Debt Repayment is maintained equal to at least the total amount payable during the year.

Article 39. Reporting

1. On quarterly, biannual and annual basis, the obligor that is an enterprise having investment project shall submit to the Ministry of Finance the following reports, which are prepared according to the form and contents regulated by the Ministry of Finance:

a) Quarterly report on fund withdrawal and debt repayment: Within the 10 first days of a quarter during the fund withdrawal period, the obligor shall provide the Ministry of Finance particulars of each withdrawal of funds, debt repayment and payment of undue debts; withdrawal of funds and debt repayment or repurchase of guaranteed bonds issued in the previous quarter;

b) Biannual report on project execution: Within the 10 first days of January and the same of July every year, in addition to the contents of a quarterly report prescribed in Point a Clause 1 of this Clause, the obligor shall submit reports on the project execution during the fund withdrawing period, the project’s operation and business activities until the end of the government-guaranteed loan term;

c) Reports on construction completion: Within 06 months after the date on which the project commissioning report is completed and certified, the obligor shall submit a report on the completion of construction works to the Ministry of Finance;

d) Report on termination of loan agreement: After paying debts in full, the obligor shall submit a report to the Ministry of Finance, accompanied by the quarterly reports on fund withdrawal and debt repayment;

dd) Financial statements: Within 10 days after the official issuance of annual financial statements (which have been duly audited and certified by the State Audit Office or an independent audit firm) of the obligor, and of the enterprise which is established to manage and operate the Project (if any), the obligor shall submit certified copies of audited financial statements to the Ministry of Finance as regulated;

e) Reports on withdrawal period and debt rescheduling: The obligor shall submit an application for extension of withdrawal period or debt rescheduling, supported by explanations thereof, to the Ministry of Finance at least 30 days before the final withdrawal date as prescribed or the following debt repayment date.

2. Within 10 days from the occurrence of any changes or events which may cause adverse influence on the project execution and debt repayment, the obligor must submit a report, which specifies the event, actual state, reasons and solutions for handling the case, to the Ministry of Finance. Cases where reporting is compulsory:

a) The project is deferred for 06 months and above against the plan for withdrawal of funds;

b) The allocation of owner s equity is deferred for 06 months against the date specified in the financial plan which is submitted when applying for a government guarantee (because shareholders of a joint-stock company fail to make capital contribution as regulated or the parent company fails to allocate funding to its subsidiary being a single-member limited liability company);

c) The project only achieves 50% of expected capacity in the first operating year;

d) The quantity of products sold during a year only achieves 50% of the planned one, resulting in adverse influence on the enterprise’s revenues as well as sources of funding for repaying debts of a government-guaranteed loan;

dd) There will be significant changes in majority shareholder, founding shareholder or model of the enterprise as decided by the Management Board or the governing body;

e) Issues relating the collateral of a loan occur;

g) Other events occur and lead to adverse influences as specified in the loan agreement.

3. Ad hoc reports: The Ministry of Finance has the right to request the obligor to submit ad hoc reports on the status of project, enterprise or loan or bond issue guaranteed by the government if it deems necessary. Within 5 working days from the receipt of the written request from the Ministry of Finance, the obligor must submit the requested report to the Ministry of Finance by post.

4. Reports on insolvency: If the obligor encounters financial difficulties and is likely unable to pay due debts of the government-guaranteed loan, or bond issue, or a forced loan from the Accumulation Fund for Debt Repayment or state budget, the obligor shall submit a report to the Ministry of Finance at least 45 days before the due date.

5. The Ministry of Finance shall provide guidance on specimens, forms and contents of reports for obligors as regulated herein.

Article 40. Inspection and supervision

1. The Ministry of Finance has the right to conduct regular supervision of fulfillment of obligations by the obligor, including:

a) The withdrawal of funds according to the registered plan;

b) The payment of debts;

c) The allocation of owner’s equity by the enterprise executing the investment project;

d) Provision of collateral for loan by the enterprise executing the investment project;

dd) The obligor’s performance of additional commitments as requested by the Government or the Prime Minister in each specific case.

2. In case the obligor denotes financial difficulties, or fails to fulfill its obligations, or there is an outstanding debt of the loan or bond issue, or an outstanding debt to the Accumulation Fund for Debt Repayment of group 4 or group 5 as regulated in Article 37 herein, the Ministry of Finance has the right to inspect the project’s financial status, or request the representative agency (if any), or the governing body to inspect the project s financial status, determine reasons and submit report thereof the Prime Minister for consideration.

3. The obligee shall share information about supervision or inspection reports (if any) within the permitted scope with the guarantor for the purpose of risk management.

Article 41. Repayment of loan and bonds

1. The obligor shall allocate funding to ensure the repayment of loan or bonds in full and on schedule.

2. If an obligor is not willing to repay debts, the guarantor (the Ministry of Finance) is entitled to:

a) Request the Serving Bank to transfer money from the obligor s Project Account to pay debts to the obligee;

b) Request the Serving Bank to request credit institutions where the obligor’s deposit accounts are opened to transfer money from these deposit accounts to pay debts in case the Project Account’s balance is not enough to pay debts;

c) Request the obligor that has purchased credit insurance for the government-guaranteed loan or bond issue under regulations in Point c Clause 3 Article 55 of the Law on public debt management to contact the insurer to fulfill debt obligations as defined in the signed insurance policy.

3. Debt repayment by the parent company (if any) or group of majority shareholders:

a) If the obligor is not able to pay debts, 06 months before the debt repayment term, the obligor must send report to its parent company (if any) or the group of shareholders holding at least 65% in the aggregate of charter capital as registered with the Ministry of Finance in order to repay debts on behalf of the obligor; in this case, the obligor is also required to send the copies of that report to the Ministry of Finance and the representative agency (if it is a state-owned enterprise, or an enterprise of which more than 50% of charter capital is held by the state);

b) If the parent company, or the group of shareholders holding at least 65% in the aggregate of charter capital as registered with the Ministry of Finance, is unable to repay debts on behalf of the obligor, the obligor must, at least 03 months before the due date, submit a report to the Ministry of Finance to consider giving an approval for a forced loan from the Accumulation Fund for Debt Repayment to pay debts to the obligee under regulations in Article 42 and Article 43 herein. In such case, the obligor shall bear the supervision of the Ministry of Finance under regulations in Clause 2 Article 37 and Clauses 2, 3 Article 38 herein.

The Ministry of Finance shall cooperate with relevant authorities in submitting a consolidated report, indicating measures for debt repayment in this case, to the Prime Minister. The obligor must strictly implement the measures for debt repayment given approval by the Prime Minister.

4. If the obligor is absolutely insolvent (it is unable to restart production from the receipt of an approval for the debt repayment plan from the Prime Minister), the Ministry of Finance shall report to the Prime Minister for making decision on collateral disposal as regulated in Article 32 herein.

If the proceeds from disposal of the collateral are not enough to pay debts, the obligor, or the parent company, or the group of shareholders holding at least 65% in the aggregate of shares as registered with the Ministry of Finance, shall be indebted of the remaining debt. In case the obligor is declared bankrupt, applicable law regulations shall apply.

5. In any case of failure to pay debts due to subjective reasons, the Ministry of Finance shall request the Prime Minister to designate the representative agency (if it is a state-owned enterprise or an enterprise of which more than 50% of charter capital is held by the state), or a competent authority, to consider taking actions against organizations and/or individuals that commit violations resulting in the insolvency under the loan agreement or forced loan agreement in accordance with applicable law regulations.

6. If the obligor’s failure to submit a report to the Ministry of Finance on his/her difficulties in fulfilling repayment obligations causes damage to the Accumulation Fund for Debt Repayment, the obligor shall compensate for any physical damage caused to the Accumulation Fund for Debt Repayment.

7. If an enterprise still has outstanding debts to the Accumulation Fund for Debt Repayment, its application for a government guarantee for a new loan, or application for approval for the project on on-lending of Government’s foreign loans shall be refused.

Article 42. Forced loans from the Accumulation Fund for Debt Repayment

1. The obligor that faces either temporary or long-term financial problems, or is unable to pay debts of the government-guaranteed loan, or bond issue, when they are due must apply for a forced loan from the Accumulation Fund for Debt Repayment for an amount which must be advanced by the Accumulation Fund for Debt Repayment to pay debts on behalf of the obligor under regulations in Point b Clause 3 Article 41 herein. To be specific:

a) If the Accumulation Fund for Debt Repayment advanced money for a debt repayment period (principal and/or interest), the forced loan shall be subject to the Minister of Finance’s decision;

b) If the Accumulation Fund for Debt Repayment advanced money for 02 debt repayment periods and above (principal and/or interest), the Minister of Finance shall submit a report to the Prime Minister for consideration and decision on the forced loan.

2. The obligor and the parent company (if any) shall enter into a forced loan agreement with the Ministry of Finance. The parent company is obliged to pay debts to the Accumulation Fund for Debt Repayment if the obligor fails to fulfill partial or all debt obligations specified in the signed forced loan agreement.

3. During the term of a forced loan:

a) The obligor shall accept the Ministry of Finance s control and transfer of money from the Project Account and other deposit accounts of the obligor to pay debts to the Accumulation Fund for Debt Repayment when they are due;

b) The obligor must submit report to the Ministry of Finance on revenues, expenditures, cash balance, deposits, financial and business situations of the project on a quarterly basis if a forced loan is given to pay debts in 02 repayment periods, or on a monthly basis if a forced loan is given to pay debts in more than 02 repayment periods, and other ad hoc reports at the request of the Ministry of Finance since the obligor gets a forced loan from the Accumulation Fund for Debt Repayment;

c) The Ministry of Finance has the right to conduct annual inspection of the obligor’s financial capacity until debts to the Accumulation Fund Debt Repayment are paid off. The Ministry of Finance has the right to make decisions on inspection in accordance with regulations of the Law on inspection, where necessary.

4. An application for a forced loan:

The obligor shall provide documentary evidences of his/her temporary financial difficulties or absolute insolvency, or the parent company (if any) shall provide documentary evidences of its inability to pay debts on behalf of the obligor, and the following documents:

a) Documents proving that the aggregated balance of the obligor’s Project Account and other accounts is not enough to partially or fully pay due debts; these documents must be certified by the Serving Bank and banks where the obligor’s accounts are opened;

b) Documents proving that the obligor or the parent company (if any) earns no profit and may not mobilize enough money for debt repayment, enclosed with the financial statements for the previous year and/or for the six-month period of the obligor and of the parent company (if any);

c) The letters of refusal to approve an application for loan of the obligor, or the parent company (if any), of at least 03 commercial banks;

d) The obligor’s application for a forced loan from the Accumulation Fund for Debt Repayment, which specifies the borrowed amounts (separate principal, interests and fees), the loan term, repayment schedule and estimated sources of funding for debt repayment, and opinions of the parent company (if any) and of the representative agency (if it is a state-owned enterprise, or an enterprise of which more than 50% of charter capital is held by the state). The application must be submitted to the Ministry of Finance at least 03 months before the due date.

5. Payment of debts under the forced loan agreement:

a) The obligor shall pay debts to the Accumulation Fund for Debt Repayment according to the signed forced loan agreement;

b) In case there is a positive balance in the Project Account or any other deposit account of the obligor opened at a commercial bank according to the obligor’s quarterly or monthly reports, the Ministry of Finance shall request the Serving Bank or such commercial bank to transfer money from the Project Account or the obligor’s deposit account, with a notice given to the obligor, in order to pay overdue debts and due debts (if any) if the obligor incurs no loss in the previous fiscal year, or to pay undue debts to the Accumulation Fund for Debt Repayment (if any) if the obligor incurs no loss in the last two fiscal years;

c) In case of failure to pay debts for more than 02 debt repayment periods under a forced loan agreement, the obligor shall submit a report, supported with documentary evidences of its financial problems, to the Ministry of Finance in order for reporting the Prime Minister.

Article 43. Conditions of a forced loan from the Accumulation Fund for Debt Repayment

1. The obligor must enter into a forced loan agreement with the Ministry of Finance (the Accumulation Fund for Debt Repayment) for each forced loan given upon the occurrence of the events mentioned in Article 41 herein under the following conditions:

a) The obligor irrevocably authorizes the Accumulation Fund for Debt Repayment to transfer the borrowed amount directly to the lender, and this amount is considered the principal of the forced loan from the Accumulation Fund for Debt Repayment;

b) Borrowing and debt repayment currency: the original currency specified in the loan agreement or bond issuance agreement. Debts shall be paid in the loan currency or in VND according to the selling rate officially announced by Vietcombank at the time of debt repayment;

c) Loan interest: the interest rate on the government-guaranteed loan or bond issue. The adjustment of the interest rate on the forced loan granted by the Accumulation Fund for Debt Repayment shall be subject to the adjustment of the interest rate on the guaranteed loan or bond issue during the loan term;

d) The interest on the forced loan granted by the Accumulation Fund for Debt Repayment shall be charged on the outstanding debt over the actual days of loan from the date on which the Ministry of Finance transfers money to pay debts to the lender to the date on which the obligor pays the loan in full to the Ministry of Finance on an annual basis of 365 days;

dd) Loan term: The Minister of Finance shall, depending on the solvency of each project, consider deciding the term of the forced loan which is granted to pay interests for not more than 02 repayment periods, or to pay the principal (and interest, if any) for a period of not exceeding 02 years. In case the term of a forced loan exceeds the prescribed periods, the Ministry of Finance shall request the Prime Minister to consider and make decision;

e) The principal and interest on the forced loan from the Accumulation Fund for Debt Repayment shall be paid on a biannual basis;

g) Sources of funding for giving loans of the Accumulation Fund for Debt Repayment are prescribed in Point d Clause 4 Article 56 of the Law on public debt management;

h) The obligor shall incur all expenses actually arisen from the transfer of money to pay debts for the obligor;

i) The obligor shall pay interest on late payment in accordance with law regulations on establishment, management and use of the Accumulation Fund for Debt Repayment.

2. The forced loan agreement must be concluded before the Ministry of Finance transfers money to pay debts to the obligee on behalf of the obligor.

Article 44. Guarantor’s obligations

1. Upon the receipt of the request for debt repayment from the obligee, the Ministry of Finance shall transfer money from the Accumulation Fund for Debt Repayment to the obligee in conformity with regulations in Point d Clause 1 Article 48 and Point b Clause 4 Article 56 of the Law on public debt management.

2. The Ministry of Finance shall give a forced loan to the obligor before making payment to the obligee but after the obligor has satisfied all of requirements mentioned in Article 42 herein.

Article 45. Using the Accumulation Fund for Debt Repayment for fulfilling the guarantor’s obligations

1. If the balance of the Accumulation Fund for Debt Repayment is not enough to give a loan to the obligor to pay debts to the obligee, the Ministry of Finance shall submit a report to the Government under regulations in Clause 7 Article 56 of the Law on public debt management.

2. In case the obligor is insolvent but the proceeds from collateral disposal are also not enough to pay debts to the Accumulation Fund for Debt Repayment in full, and the parent company of the obligor (if any) is unable to pay debts for the obligor, the Ministry of Finance shall submit a report to the Prime Minister to decide measures against debts which cannot be collected.

Article 46. Actions against violations committed by the obligor

1. The obligor shall be considered to have acts of violation when failing to fulfill relevant obligations prescribed herein.

2. Within 60 days from the receipt of a notice from the Ministry of Finance, if the obligor fails to remedy his/her violations, the Ministry of Finance shall supervise financial sources of the obligor, and request the Prime Minister to reject the obligor’s application for government guarantee for a new loan, or on-lending of a foreign loan, or funding from state budget.

3. The Ministry of Finance shall impose specific sanctions on the obligor in the following cases of violation:

a) Request the lender to suspend the obligor’s withdrawal of funds if withdrawing documents are found to have mistakes, and then request the obligor to modify such withdrawing documents;

b) Increase the current government guarantee fee charged on the government-guaranteed loan or bond issue as approved by the Prime Minister by 10% in the following three years provided that total fee shall not exceed 2% per year if the obligor fails to allocate the owner’s equity as registered in the planning year or as regulated by law, or the obligor fails to carry out the mortgage procedures, fails to comply with reporting policies, fails to maintain the required balance in the Project Account, or fails to comply with other regulations herein.

Chapter III

ISSUANCE OF GOVERNMENT GUARANTEES TO BANKS FOR SOCIAL POLICIES AND MANAGEMENT THEREOF

Section 1. APPRAISAL, APPROVAL AND ISSUANCE OF GOVERNMENT GUARANTEES TO BANKS FOR SOCIAL POLICIES

Article 47. Application for a government guarantee for bond issue

1. The application for a government guarantee for an issue of bonds in the domestic market, made by the bank for social policies.

2. The scheme for bond issuance, including the following contents:

a) The needs for funds for execution of preferential credit programs according to the credit growth limit approved by the Prime Minister, including funds from issuance of guaranteed bonds;

b) The plan for raising funds for execution of preferential credit programs, including funds from issuance of guaranteed bonds;

c) Terms and conditions of bonds, including the quantity of bonds to be issued, term (01 year and longer), method for payment of bond principal and interest;

d) The plan for issuing bonds and using funds from issuance of bonds;

dd) The plan for using and managing funds from issuance of bonds, and repurchase and swap of guaranteed bonds (if any);

e) The plan for payment of bond principal and interest when they are due;

g) The obligor’s commitments to bondholders;

h) The finance of the bank for social policies over 03 years preceding the planning year, including owner’s equity, total assets, total funds raised, total revenue, total expense, difference between revenue and expense, provision of subsidies on interest rate difference and state management fees imposed upon the bank for social policies;

i) The raising and use of funds for execution of dedicated credit programs of each of the 03 years preceding the planning year, specifying:

- Total funds raised each year, sorted by source, including: funds from state budget, funds from issuance of guaranteed bonds and other sources; recovered loans; funds carried forward from the preceding year.

- The use of funds in each year, including: repayment of due debts (including payment of principal of guaranteed bonds); execution of dedicated credit programs (opening balance, loans granted in the year, loans collected in the year and ending balance); funds carried forward to the succeeding year and other used funds.

k) The issuance, payment of principal and interest of guaranteed bonds, and outstanding bonds over 03 years preceding the planning year.

3. The written approval for the scheme for bond issuance given by the Management Board of the bank for social policies, or its authorized person as defined in its charter.

4. Financial statements of 02 years preceding the year before the planning year audited by the State Audit Office or an independent audit firm (if the state audit office does not take charge of auditing financial statements of such years), and financial statements of the year before the planning year approved by General Director of the bank for social policies.

5. Documents proving the eligibility for issuance of guaranteed bonds as prescribed in Clause 2 Article 5 herein:

a) The Prime Minister’s decision on implementation of the Government’s plan for investment and development credit growth;

b) Documents of the Government, the Prime Minister approving other dedicated credit programs of the State (if they are not part of the credit growth plan approved).

Article 48. Application processing, guarantee limit and issuance of government guarantee

1. Based on the application for issuance of guarantee for a bond issue and pursuant to regulations herein and relevant law regulations on bond issuance, the Ministry of Finance shall consider and comment on the bank’s scheme for bond issuance, and satisfaction of eligibility requirements for government guarantee, and submit a report to the Prime Minister for approval for the issuance of government guarantee and guarantee fee included in the annual borrowing and debt repayment plan. To be specific:

a) Within 10 working days after the Prime Minister approves the annual credit growth target, the bank for social policies (the applicant) shall submit 03 sets of application including the documents specified in Article 47 herein to the Ministry of Finance, that will inspect the adequacy and validity of the application, and request additional documents (if any);

b) Within 30 working days from the day on which adequate documents are received as prescribed in Point a Clause 1 of this Article, the Ministry of Finance shall consider and comment on the applicant’s annual plan for issuance of guaranteed bonds, and submit a report to the Prime Minister for approval.

c) A report submitted to the Prime Minister includes:

- The applicant’s eligibility for issuance of guaranteed bonds.

- The applicant’s operation and finance.

- Sources of funding for execution of dedicated credit programs and the plan for issuance of guaranteed bonds.

- The plan for using funds from issuance of guaranteed bonds.

- Proposed government guarantee limit of the planning year serving the dedicated credit programs approved by the Prime Minister.

2. The Prime Minister shall decide the limit on quantity of guaranteed bonds to be issued by the applicant in the annual public borrowing and debt repayment plan on the basis of the Government s decision on annual government guarantee limit. After the Prime Minister grants a written approval, the Ministry of Finance shall send the applicant a written notification for issuing bonds as prescribed in Article 49 herein.

3. While pending approval by the Prime Minister for the annual limit on the government guarantee for bonds issued by the applicant, the Ministry of Finance shall notify the applicant of the provisional limit on quantity guaranteed bonds to be issued in the first quarter of the planning year, which must not exceed the principal of guaranteed bonds to mature in the first quarter and the proposed guarantee limit. The notification shall be sent before December 31 of the year preceding the planning year.

4. The Ministry of Finance shall carry out procedures for confirmation of guarantor’s liability regarding the issued guaranteed bonds after receiving the applicant’s report on the bond issue as prescribed in Clause 4 Article 49 herein.

Section 2. ISSUING GUARANTEED BONDS AND MANAGING FUNDS FROM ISSUANCE OF GUARANTEED BONDS BY A BANK FOR SOCIAL POLICIES

Article 49. Issuance and payment of bonds

1. According to the Ministry of Finance’s notification of issuance limit specified in Clause 3 Article 48 herein, the plan for disbursement of funds for dedicated credit programs and plan for repayment of mature guaranteed bonds, the relevant bank for social policies shall submit its annual bond issuance plan, which is divided into quarters, to the Ministry of Finance. The Ministry of Finance shall send a written notification if it does not consent with the bank’s bond issuance plan.

2. The bank for social policies shall organize the issuance of guaranteed bonds in the form of bidding in accordance with applicable law regulations on Government’s issuance of debt instruments.

3. Quantity and interest rate of guaranteed bonds:

a) The quantity of bonds to be issued in each bond issue shall be decided by the bank for social policies on the basis of the issued guarantee limit, the plan registered with the Ministry of Finance as prescribed in Clause 1 of this Article, and conditions, ability for raising funds in the market. If the actual quantity of bonds issued in the quarter does not reach the issuance limit registered with the Ministry of Finance, the difference may be carried forward to the succeeding quarter. If the quarter’s quantity of bonds to be issued has to be increased, a written notification shall be sent to the Ministry of Finance 10 working days before the planned date of issuance;

b) The interest rate is decided by the bank for social policies according to the market developments at the issuance period and the bracket of interest announced by the Ministry of Finance.

4. Within 05 working days from the end of each issue, the bank for social policies shall submit a report to the Ministry of Finance in order for the Ministry of Finance to determine the actual guarantor’s liability as prescribed by law. Based on the bank’s report, the Ministry of Finance shall issue a confirmation of guarantor’s liability regarding the issued guaranteed bonds on a quarterly basis.

5. Fees for issuance and payment of bonds shall be covered by the relevant bank for social policies in accordance with applicable laws.

6. Government-guaranteed bonds issued by banks for social policies shall be registered and deposited at Vietnam Securities Depository; listed and traded at Stock Exchanges in accordance with applicable law regulations on registration, depository, listing and trading of Government debt instruments.

7. Repurchase and swap of government-guaranteed bonds:

a) A bank for social policies may repurchase or swap government-guaranteed bonds in order to serve its debt restructuring. Repurchase and swap of guaranteed bonds must be carried out openly, transparently and in conformity with market rules;

b) Before repurchasing or swapping bonds, the relevant bank for social policies shall formulate and submit its plan for repurchase or swap of guaranteed bonds to the Prime Minister for approval. A plan for repurchase or swap of guaranteed bonds includes: purpose of repurchase or swap; terms and conditions of bonds to be repurchased or swapped; planned date of repurchase or swap; funds for repurchase or swap bonds; estimated outstanding bonds guaranteed by the government after repurchase or swap;

c) At least 10 working days before the planned date of repurchase or swap, the bank for social policies shall request the Ministry of Finance in writing to notify the bracket of interests on repurchased bonds or discount rates on swapped bonds;

d) Within 10 working days from the end of each repurchase or swap of guaranteed bonds according to the plan approved by the Prime Minister, the bank for social policies shall submit a report to the Ministry of Finance on results of its repurchase or swap of guaranteed bonds in order for the Ministry of Finance to determine and adjust the actual liability of the guarantor;

dd) The bank for social policies shall arrange funds and cover fees for carrying out the repurchase or swap of guaranteed bonds;

e) Procedures for repurchase or swap of government-guaranteed bonds shall be performed in accordance with the Minister of Finance’s guidance on repurchase and swap of Government debt instruments.

Article 50. Using funds from issuance of bonds

1. Each bank for social policies shall record, manage and use proceeds from the issuance of guaranteed bonds in accordance with its Regulation on financial management and bond issuance scheme approved by the Prime Minister as prescribed in Clause 3 Article 48 herein.

2. The bank for social policies must not provide collateral for issuing guaranteed bonds according to the bond issuance scheme approved by the Prime Minister.

3. The bank for social policies shall manage and use funds from the issuance of guaranteed bonds in conformity with applicable law regulations on issuance and management of government guarantees.

Article 51. Government guarantee fee charged to banks for social policies

1. The government guarantee fee charged to a bank for social policies is 0.25%/year of outstanding guaranteed bonds.

2. Collection, transfer and use of guarantee fees paid by banks for social policies shall be performed in accordance with provisions in Article 28 and Article 29 herein.

3. A bank for social policies may aggregate guarantee fee paid in its operating expenses.

Article 52. Reporting regime

1. The bank for social policies shall submit the following periodic reports to the Ministry of Finance:

a) Report on used funds and debt repayment: Within 10 working days from the end of each quarter and within 20 working days from the end of the fiscal year, the bank for social policies shall send the Ministry of Finance a report on the raised and used funds, principal and interest payment, which is made according to the Ministry of Finance s guidance;

b) Report on financial management: The audited annual financial statement within 10 working days from the day on which the audit report is available.

2. Apart from the periodic reports, the bank for social policies must also submit ad hoc report on financial management within 10 working days from the receipt of written request from the Ministry of Finance.

Section 3. MEASURES FOR GUARANTEEING REPAYMENT OF GUARANTEED BONDS BY BANKS FOR SOCIAL POLICIES

Article 53. Payment of bonds by banks for social policies

Banks for social policies shall pay the bond principal and interest upon their maturity date by their legal sources of funding.

Article 54. Guarantor’s obligations

1. If the bank for social policies becomes insolvent or is unable to fully pay the bond principal and interest when they are due, at least 03 months before the maturity date of the bonds, it must send the Ministry of Finance a report on its actual financial status and proposed plan for fulfilling payment obligations regarding the issued guaranteed bonds.

2. Documents requesting the Ministry of Finance to pay mature bonds include:

a) A document requesting the Ministry of Finance to pay principal and interest of guaranteed bonds upon their maturity date, specifying: Bond s code; the sum of mature principal and interest; payment period; the obligor s financial health; reasons for requesting the Ministry of Finance to pay debts; proposed period and funds for paying debts to the Ministry of Finance;

b) The obligor’s financial statement of the requesting year, and of 02 previous years.

3. Based on the request of the bank for social policies, the Ministry of Finance shall consider and submit a report to the Prime Minister on the plan for payment of guaranteed bond principal and interest on behalf of the bank, including:

a) Conditions for debt payment by the Ministry of Finance;

b) Amounts and periods of debt payment by the Ministry of Finance;

c) Funds for paying debts.

4. The Ministry of Finance shall make payment to bondholders according to the Prime Minister s decision.

Article 55. Managing risks associated with banks for social policies

1. The Ministry of Finance shall suspend issuance of guaranteed bonds by a bank for social policies in the following cases:

a) The bank for social policies does not adhere to the plan for issuance of guaranteed bonds approved by the Prime Minister and the notification of the Ministry of Finance;

b) Interest rate of guaranteed bonds exceeds the bracket notified by the Ministry of Finance;

c) The quantity of guaranteed bonds issued exceeds limit approved by the Prime Minister.

2. The bank for social policies that commits any of the violation specified in this Article during an issue of guaranteed bonds will have it and the next issues suspended. The bank for social policies shall immediately suspend the issuance of guaranteed bonds as soon as the notification is received from the Ministry of Finance.

3. In case of failure to fulfill payment obligations for government-guaranteed bonds, the bank for social policies shall receive debts regarding the bonds paid by the Ministry of Finance as prescribed in Article 54 herein and relevant law regulations.

4. The Ministry of Finance shall request the Prime Minister to refuse applications submitted by a bank for social policies for the government guarantee for new bond issuance programs/ schemes if it fails to fully pay debts as prescribed in Clause 3 of this Article to the Ministry of Finance.

Chapter IV

RESPONSIBILITY OF RELEVANT AUTHORITIES, ORGANIZATIONS AND INDIVIDUALS

Section 1. RESPONSIBILITY OF REGULATORY AUTHORITIES

Article 56. The Ministry of Finance

1. Fulfill duties of the giver of guarantee as defined in Clause 1 Article 48 of the Law on public debt management. To be specific:

a) Negotiate and comment on loan agreements and plans for issuance of bonds associated with investment projects and preferential credit programs, for which proposals for government guarantee have been approved, based on applications submitted by enterprises and banks for social policies as prescribed in Article 14, Article 19 and Article 47 herein;

b) Appraise proposals for government guarantee, applications for issuance of government guarantee, and issuance of government guarantee;

c) Stipulate the bracket of interest rates on government-guaranteed bonds;

d) Monitor the withdrawal of funds and debt repayment by obligors regarding government-guaranteed loans or bond issues.

dd) Fulfill the guarantor’s obligations as defined in the letter of guarantee if the obligor defaults;

e) Adopt measures specified in this Decree to collect debts and fees arising during the payment of debts on behalf of the obligor, including requesting the Serving Bank or other banks where the obligor’s accounts are opened to transfer money from these accounts to pay debts to the Accumulation Fund for Debt Repayment according to commitments and authorization by the obligor (also the account owner);

g) Submit report to the Prime Minister on the status and funds for fulfilling guarantor’s liability as prescribed in Article 45 herein;

h) Submit a periodic report to the Prime Minister in the second quarter of the following year on consolidation of issued government guarantees as prescribed in Point e Clause 1 Article 48 of the Law on public debt management; Such report includes:

- The status and specific figures of guaranteed loans or bonds issued in the previous year;

- Amounts accumulated up to the end of previous year of loans or issued bonds guaranteed by the government;

- General assessment of the performance of government guarantee limit granted in the previous year, fulfillment of obligations by obligors; results, difficulties and queries about issuance and management of government guarantees, and relevant proposals.

2. Consult representative agencies, the sector regulatory authorities and people’s committees of provinces/ cities about enterprises and investment projects using funds from guaranteed loans in course of processing applications for government guarantee.

3. Instruct and inspect collaterals for government-guaranteed loans and bond issues.

4. Give opinions to representative agencies, sector regulatory authorities and obligors about issues relating government-guaranteed loans and bond issues.

5. Submit report to the Prime Minister on unexpected difficulties that arise during the management of loans or issued bonds guaranteed by the government.

6. Carry out financial inspections to inspect obligors’ compliance with applicable law regulations on issuance and management of government guarantees in accordance with regulations herein and the law on inspection.

7. Take charge of handling legal disputes involving a foreign obligee suing Vietnamese Government in connection with the letter of guarantee.

Article 57. The Ministry of Justice

1. Participate in negotiation and give opinions about legal matters mentioned in the drafts of foreign loan agreements requiring the government guarantee, and draft letters of guarantee.

2. Take charge of discussing with and providing legal opinions about the letter of guarantee and the guarantor for lenders in accordance with applicable laws.

3. Cooperate with Ministry of Finance in handling legal disputes about the performance of letters of guarantee.

Article 58. The Ministry of Foreign Affairs

1. Cooperate with the Ministry of Finance in appointing qualified overseas Vietnamese missions to act as recipients of documents in legal proceedings as defined in letters of guarantee.

2. Give opinions about the appointment of overseas Vietnamese missions to act as recipients of documents in legal proceedings under terms and conditions of loan agreements.

Article 59. The State Bank of Vietnam

1. Grant certificates of registration or registration of change of foreign loans guaranteed by the government to obligors upon the issuance of letters of guarantee by the Ministry of Finance.

2. Update the credit information center’s system with information about the status of loans granted to obligors by credit institutions and branches of foreign banks.

Article 60. Ministries, ministerial-level agencies, sector regulatory authorities

1. Give approval for borrowing plans and bond issuance schemes of enterprises of which 100% charter capital is held by the State in the capacity of representative agencies with respect of the following contents:

a) Approve loans or bond issues of enterprises of which 100% charter capital is held by the State for execution of investment projects;

b) Give opinions about the reasonableness of enterprise s calculation parameters (estimated selling price or sources of revenues; operating capacity and frequency of machinery/ equipment, depreciation, etc.) for formulating financial plans and cash flow for debt repayment.

c) Evaluate the efficiency and solvency of the project’s investor and financial plan;

d) Consider the feasibility of an enterprise’s commitments specified in a loan agreement, borrowing plan or bond issuance scheme within the ambit of rights and duties of a representative agency of state capital in an enterprise of which 100% charter capital is held by the State in accordance with applicable law regulations on management and use of state funds in enterprises;

2. Inspect and expedite obligors under their management to fulfill their obligations towards lenders and the Ministry of Finance; take charge of dealing with issues relating to these obligors’ failure to fulfill obligations.

3. Inform the Ministry of Finance in writing of decisions, policies or events that may cause adverse influence on the execution of projects and the performance of payment obligations as mentioned in loan agreements of enterprises under their management, and propose solutions for handling these cases.

4. Give opinions about the contents specified in Point b, Point c and Point d Clause 1 of this Article in the capacity of a representative agency for the enterprise of which less than 100% of charter capital is held by the State when applying for the government guarantee for its loan or bond issuance.

5. Give opinions about borrowing plans or bond issuance schemes of enterprises not funded by the State in the capacity of sector regulatory authorities with respect to issues relating to investment projects, and eligibility for a loan or issuance of bonds for which the government guarantee is applied at the request of the Ministry of Finance in course of processing enterprises’ applications for proposals for government guarantee or issuance of government guarantee.

6. Cooperate with the Ministry of Finance in handling disputes about the performance of letters of guarantee.

Article 61. Provincial-level People s Committees

1. Give opinions about business activities of the enterprise that applies for the government guarantee in province (if any); about the investor’s compliance with procedures concerning the investment project in province at the request by the Ministry of Finance.

2. Cooperate in disposing the collateral under the management of a Provincial-level People’s Committee.

3. Supervise the compliance with applicable law regulations by enterprises executing programs or projects in province.

Section 2. RESPONSIBILITY OF PARTIES INVOLVED IN THE GOVERNMENT GUARANTEE

Article 62. Responsibility of an enterprise acting as an obligor

1. Provide adequate documents as requested and assume responsibility for the accuracy and truthfulness of any figures and documents included in its application for approval for the government guarantee proposal, or issuance of government guarantee, submitted to the Ministry of Finance in conformity with regulations herein and relevant instructional documents.

2. Consult the Ministry of Finance before granting power to allocate funds if an application for government guarantee for a loan requires specific financial conditions after the proposal for government guarantee has been approved.

3. Take charge of negotiating domestic and foreign loan agreements.

4. Provide draft loan agreement, letter of guarantee and legal opinions (if any) relating to a domestic or foreign loan for relevant authorities at least 07 working days before the negotiation.

5. Provide the duly signed domestic or foreign loan agreement for the Ministry of Finance.

6. Organize the conclusion of loan agreement or agreement on bond issue guaranteed by the government after obtaining an approval from a competent authority.

7. Propose a bank to the Ministry of Finance to act as the Serving Bank of the project; open a Project Account at the Serving Bank and register it with the Ministry of Finance, and submit a report to the Ministry of Finance on existing deposit accounts with certification of credit institution where the relevant deposit account is opened. In case of change of the Serving Bank, the obligor must explain reasons thereof in writing to the Ministry of Finance to consider giving approval within 05 working days as from the receipt of the obligor s request.

8. Fulfill obligations of a borrower or bond issuer under terms and conditions of the signed loan agreement or bond issue agreement granted the government guarantee.

9. Carry out procedures for initial registration or registration of changes in a foreign loan guaranteed by the government with the State Bank of Vietnam in accordance with relevant law regulations.

10. Fully allocate owner’s equity according to the progress of the investment project; maintain sufficient owner’s equity according to the project s progress to cover expenditures of project items requiring the owner’s equity; ensure the proportion of owner’s equity as registered in the application for government guarantee when making cost statement of a finished project.

11. Transfer revenues from the investment project immediately when they arise to the Project Account according to the ratio of the guaranteed loan amounts to total borrowed capital of that project.

Commit to maintain the Project Account s balance (in original currency or in VND according to the exchange rate announced by the Serving Bank) from the first year when repayment obligations occur for the purpose of ensuring the payment of debts on schedule.

12. Regularly assess potential risks to the enterprise, the project and adopt appropriate risk prevention measures to ensure the enterprise’s solvency.

13. Fulfill obligations of an obligor towards the Ministry of Finance, consisting of:

a) Provide collateral for the government-guaranteed loan or bond issue, make declaration and registration of secured transactions concerning the collateral, and provide additional collateral to the Ministry of Finance in accordance with law regulations on secured transactions;

b) Pay guarantee fee in full and on schedule according to the notice given by the Ministry of Finance;

c) Inform the Ministry of Finance of any changes relating to a loan agreement, the obligor, the structure of shareholders or capital contributors of the enterprise executing the investment project using funds from a government-guaranteed loan;

d) Strictly comply with reporting policies as regulated by the Ministry of Finance;

dd) Give a written report to the Ministry of Finance at least 03 months before the due date of debts if the obligor becomes insolvent or is unable to make full payment of debts;

e) Get a forced loan from the Ministry of Finance in case the Ministry of Finance approves a loan from the Accumulation Fund for Debt Repayment to repay government-guaranteed loan, or bonds, and pay fees of transferring money for debt repayment;

g) Accept and comply with other necessary sanctions in course of managing the government guarantee at the request of the Ministry of Finance;

h) Closely cooperate with the Ministry of Finance in inspecting the execution of investment project, where necessary;

i) Fulfill other obligations as specified in the written commitment submitted to the Ministry of Finance as prescribed in the Appendix I enclosed herewith.

14. Provide adequate fund withdrawing documents to the Serving Bank so as to check the conformity of such documents with the signed commercial contract and loan agreement before sending them to the lender.

15. Pay service fees to the Serving Bank and other expenses (if any) to relevant parties in accordance with regulations herein.

16. Conduct annual audit of the investment project during the construction phase, and annual audit of enterprise upon the completion of the investment project, and send copies of audit reports to the Ministry of Finance.

17. Comply with other relevant regulations of the Law on public debt management and of this Decree on responsibility of authorities, organizations and individuals receiving and using funds from government-guaranteed loans.

Article 63. Responsibility of a parent company

1. If the obligor is an associate company in the form of parent company – subsidiary, the parent company shall:

a) Discharge obligations of a parent company according to the written commitment sent to the Ministry of Finance before processing the application for government guarantee;

b) Give financial assistance to the obligor so as to ensure the project’s progress and payment of due debts to the lender when the obligor defaults.

2. The parent company shall supervise and instruct the obligor to fulfill all obligations towards the lender and the Ministry of Finance according to the signed documents.

3. A written commitment by a parent company that is an enterprise of which 100% charter capital is held by the State to its subsidiary, also the obligor, under regulations in Clause 11 Article 14 and Clause 10 Article 19 herein shall not be aggregated in its guarantee for this subsidiary applying for a loan at a credit institution as prescribed in Clause 4 Article 23 of the Law on management and use of state funds in enterprises.

Article 64. Responsibility of a guaranteed bank for social policies

1. Fulfill obligations and responsibility in accordance with regulations herein, law regulations on bond issuance and relevant legislative documents, including:

a) Formulate the scheme for issuance of guaranteed bonds and submit it to competent authorities for approval; take responsibility for the accuracy and truthfulness of information in the scheme and inform the investors;

b) Organize issuance of guaranteed bonds in accordance with the scheme approved by the Prime Minister and regulations herein;

c) Take responsibility for the issuance of guaranteed bonds and the use of funds obtained there from in accordance with the purposes in the scheme approved by the Prime Minister.

2. Conduct audit of annual financial statements and comply with the Ministry of Finance’s regulations on information publishing and reporting.

Article 65. Responsibility of an obligee

1. The lender (also the obligee) shall closely cooperate with the Ministry of Finance during the negotiation on a letter of guarantee.

2. The obligee shall assume responsibility to cooperate with the Ministry of Finance during the term of a government-guaranteed loan and the validity of the letter of guarantee. To be specific:

a) Send the copy of every notice of fund withdrawal, or changes in interest rate (if any), or debt collection letter to the Ministry of Finance at the same time when it is delivered to the obligor;

b) Submit a report to the Ministry of Finance on fund withdrawal, debt repayment and project execution of the obligor immediately when discovering any abnormal events;

c) Send other notices to the Ministry of Finance as specified in the government-guaranteed loan agreement.

3. The obligee shall provide for the Ministry of Finance with necessary information about the obligor, the project and the government-guaranteed loan, and reports on inspections conducted within the permitted scope to ensure the proper use of borrowed amounts and the obligor’s fulfillment of obligations as defined in the loan agreement.

Article 66. Responsibility of a serving bank

1. Fulfill its duties and cooperate with the Ministry of Finance and relevant authorities in managing the project, loan or bond issue guaranteed by the government in accordance with regulations herein.

2. Provide the Ministry of Finance with the printed report given by the National Credit Information Center of Vietnam affiliated to the State Bank of Vietnam on the obligor’s credit rating of the reporting year within the first week of the following fiscal year.

3. Implement necessary sanctions as requested by the Ministry of Finance in conformity with prevailing laws and regulations herein in order to serve the debt collection by the Accumulation Fund for Debt Repayment with respect to the forced loan given to the obligor for paying guaranteed loan or corporate bonds, and fees arising from payment of debts made on behalf of the obligor.

4. Manage the loan, collect and pay debts, and adopt security interests for a government-guaranteed loan in an impartial manner as other loans given to the obligor by the Serving Bank.

Chapter V

IMPLEMENTATION PROVISIONS

Article 67. Effect

1. This Decree takes effect July 01, 2018.

2. This Decree supersedes the Government’s Decree No. 04/2017/ND-CP dated January 16, 2017, regulations in Clause 1 Article 3, Clause 2 Article 4, Article 6, Article 9 Chapter I, Section 2 Chapter II, Section 2 Chapter III and Chapter IV on government-backed bonds of the Government’s Decree No. 01/2011/ND-CP dated January 05, 2011.

Article 68. Transitional provisions

1. Government-guaranteed loans or bonds with remaining debt repayment period of less than 03 years up to the date of entry into force of this Decree shall not be governed by regulations in Article 22-25 (except Points a, b, g Clause 1 Article 25) and Clause 2 Article 30 of this Decree.

2. Guaranteed loans or bond issues of which the withdrawal of funds is in progress shall not be governed by regulations in Article 24 and Clause 14 Article 62 of this Decree.

3. Loans, bond issues, preferential credit programs or investment projects of which special policies on government guarantee have been approved before the date of entry into force of this Decree shall be performed or executed in accordance with the approved policies.

4. The collateral for an investment project for which the government guarantee has been issued before the date of entry into force of this Decree shall be provided in accordance with applicable law regulations on collaterals for government-guaranteed loans or bond issues at the date of issuance of the government guarantee.

Article 69. Implementation organization

1. Ministers, heads of ministerial-level agencies, heads of the government’s affiliates, chairpersons of provincial-level people s committees, relevant enterprises, organizations and individuals shall implement this Decree.

2. Ministry of Finance shall provide guidance to implement this Decree if it deems necessary to serve the state management.

For the Government

The Prime Minister

Nguyen Xuan Phuc

APPENDIX I

FORM OFCOMMITMENT
(Issued by theobligor)
(May be supplemented or amended depending on actual requirements)
(Enclosed with Decree No. 91/2018/ND-CP dated June 26, 2018 of the Government)

THE SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
---------------

……………, day…. month…. year……….

COMMITMENT

…………………… (Name of the enterprise) with registered office at …………………… represented by …………. (Name and title of Chairperson of the Board of Directors/Chairperson of the Members Council, and/or General Director) who is the legal representative of the enterprise (hereinafter referred to as Abbreviated name of the enterprise).

(Name of the enterprise) commits itself to the Ministry of Finance, which is the giver of guarantee on behalf of the Government of the Socialist Republic of Vietnam, in relation to the Loan Agreement No.... dated ... signed between (Name of the enterprise) and (Name of the lender) on the bonds issued for (Name of the investment project) as follows:

Article 1.(Name of the enterprise) commits to performing the following obligations:

1. Strictly and fully implement the law provisions on issuance and management of government guarantees.

2. Strictly and fully perform the obligations committed in the commercial contract, Government-guaranteed loan agreement, and other agreements (if any) signed with the Ministry of Finance or the organization providing professional services as authorized by the Ministry of Finance.

3. Manage and use the borrowed capital, contributed capital, and equity for the right purposes and on schedule as registered when applying for the government guarantee.

4. Before the Ministry of Finance issues the Letter of Guarantee:

a) Enter into a mortgage agreement with the Ministry of Finance;

b) Propose a bank to act as the serving bank for the loan or bond issuance; open a project account at the serving bank, submit a report to the Ministry of Finance on the project account number and all existing deposit accounts with certification of the credit institutions where such deposit accounts are opened.

5. During the validity of the Letter of Guarantee:

a) Ensure the equity for the project as approved by the competent authority and maintain sufficient equity according to the project s progress to cover expenditures of project items requiring the equity; ensure the proportion of equity as registered in the application for government guarantee when making cost statement of a finished project’

b) Make declaration and registration of the collateral, and provide additional collateral in accordance with the law provisions on government guarantee and secured transactions;

c) Record and carry out accounting works concerning the Government-guaranteed loan or proceeds from the issuance of bonds in a timely and proper manner in accordance with the law provisions;

d) Pay guarantee fees in full and on schedule at the rate approved by the Prime Minister, which is calculated on the principal balance guaranteed by the Government;

dd) Fully and strictly comply with the information and reporting policies as regulated by the Ministry of Finance;

e) Inform the Ministry of Finance of any changes related to the loan agreement, the borrower (the obligor), the structure of shareholders or capital contributors of the enterprise executing the investment project guaranteed by the Government;

g) Create conditions for the representative of the guarantee-granting agency to inspect the implementation of the investment project when necessary.

Article 2.(Name of the enterprise) commits to taking measures to ensure payment obligations of the Government-guaranteed loan or proceeds from the issuance of bonds as follows:

1. Use the Project Account’s balance to firstly repay the Government-guaranteed loan, proceeds from the issuance of bonds and loans from the Accumulated Fund for Debt Repayment to repay debts for related investment projects.

2. Commit to transfer revenues and other legal incomes generated from the project s operations to the project account at the servicing bank and maintain the project account s balance (in original currency or in VND according to the exchange rate announced by the serving bank) as from the first year when payment obligations occur in order to ensure funding for repaying debts on schedule as prescribed. In cases where the project account’s balance is smaller than the committed amount, the serving bank has the right to request (Name of the enterprise) to transfer additional money and report to the Ministry of Finance.

(Name of the enterprise) unconditionally and irrevocably authorizes the serving bank to deduct money from the project account and request the credit institutions where (Name of the enterprise) open deposit accounts to transfer money from such deposit accounts to the project account for ensuring the required minimum balance of the project account or paying debts, then notify (Name of the enterprise), Ministry of Finance. (Name of the enterprise) irrevocably authorizes the credit institutions where its deposit accounts are opened to transfer money from such deposit accounts to the serving bank to fulfill the debt repayment obligations of (Name of the enterprise) at the request of the Ministry of Finance.

3. In case of breach of debt repayment obligations under the Government-guaranteed loan agreement or bond issuance agreement:

a) Send a written notice to the Ministry of Finance at least 90 days before the due date of debts if it becomes insolvent or is unable to make full payment of debts, which clearly states the reasons and provides proofs of the inability to perform the promised payment obligations in the case of breach of the payment obligations;

b) (Name of the enterprise) and its parent company (if any) shall get a forced loan from the Ministry of Finance (Accumulated Fund for Debt Repayment) under the terms and conditions prescribed by the law provisions on issuance and management of guarantee; jointly share the debt repayment obligations to the Accumulated Fund for Debt Repayment if (Name of the enterprise) is unable to make full payment of the debts under the signed forced loan contract;

c) Have the obligation to repay the amount that the Ministry of Finance has provided as a forced loan for paying debts or has paid the debts on behalf of (Name of the enterprise), plus all actual expenses incurred in relation with the provision of the forced loan or the payment of the debts to (the lender) on the enterprise’s behalf under the forced loan contract signed by (Name of the enterprise), its parent company (if any) and the Ministry of Finance.

4. In case of breach of debt repayment obligations under the forced loan contract with the Accumulated Fund for Debt Repayment:

a) During the term of a forced loan from the Accumulated Fund for Debt Repayment, (Name of the enterprise) accept the Ministry of Finance s control of the project account and allow it to transfer money from the project account and other deposit accounts of (Name of the enterprise) to pay debts to the Accumulated Fund for Debt Repayment when they are due;

b) Submit a report to the Ministry of Finance on all revenues, expenditures, cash balance, deposits, financial situations, production and business situations of the project on a quarterly basis if the forced loan is given to pay debts in 03 repayment periods or fewer; or on a monthly basis if the forced loan is given to pay debts in 04 repayment periods or more, and other ad hoc reports at the request of the Ministry of Finance since the forced loan is provided by the Accumulated Fund for Debt Repayment;

c) In cases where there is a positive balance in the project account or any other deposit account of (Name of the enterprise) opened at a commercial bank according to the quarterly or monthly reports of (Name of the enterprise), the Ministry of Finance may request the serving bank or such bank to transfer money from the project account or the deposit account of (Name of the enterprise), with a notice given to (Name of the enterprise), in order to collect overdue debts and due debts (if any) if (Name of the enterprise) incurs no loss in the previous fiscal year; or to collect undue debts to the Accumulated Fund for Debt Repayment (if any) if (Name of the enterprise) incurs no loss in the last 3 consecutive fiscal years;

5. Accept and agree to the right of the Ministry of Finance to take any sanctions under Vietnamese laws to recover from (Name of the enterprise) the loans provided by the Ministry of Finance to (Name of the enterprise) in order for it to pay debts, or used to pay debts on behalf of (Name of the Guarantor), the right to request the serving bank to transfer money from the project account and other accounts to pay the debts to the obligee or to the Accumulated Fund for Debt Repayment; (Name of the enterprise) accepts the Finance Ministry s method of disposing the collateral to fulfill its debt repayment obligations.

6. Accept other sanctions for violations in the process of guarantee management in accordance with the law provisions on issuance and management of government guarantees.

Article 3.(Name of the enterprise) commits to complying with requirements and procedures in accordance with the law provisions on government guarantee and relevant law provisions when performing operations related to the transfer or assignment of the Government-guaranteed loan, contributed capital, shares of the Company, the project or the project s post-investment assets to a third party.

Article 4.(Name of the enterprise) which is the parent company of (Name of the enterprise which is the obligor) commits to being responsible for financial support for (Name of the enterprise) when (Name of the enterprise) encounters financial difficulties making it unable to fulfill its debt repayment obligations under the Government-guaranteed loan agreement or under the forced loan contract signed with the Accumulated Fund for Debt Repayment.

Article 5. The obligations of (Name of the enterprise) and (Name of the parent company, if any) to the Ministry of Finance shall terminate only when (Name of the enterprise and its parent company) have fulfilled all obligations to the obligee and the Ministry of Finance (regardless of the termination of the loan or bond issuance or the expiration of the Letter of Guarantee, etc.).

This commitment is made into ... copies, each of which is kept by the Ministry of Finance, (Name of the enterprise), the parent company of (Name of the enterprise) (if any). 

(Name of the enterprise)

Confirmation and agreement:

Parent company (of the obligee, if any) (Name of the agency)

………………………………………………………….

Name

Position

Seal of the agency

APPENDIX II

TABLE OF GOVERNMENT GUARANTEE FEES APPLICABLE TO LOANS AND PROCEEDS FROM THE ISSUANCE OF BONDS BY ENTERPRISES IMPLEMENTING INVESTMENT PROJECT

(Enclosed with Decree No. 91/2018/ND-CP dated June 26, 2018 of the Government)

APPENDIX III

METHOD OF CALCULATING THE MONTHLY BALANCE
COMMITTED TO BEING MAINTAINED IN THE PROJECT ACCOUNT
(Enclosed with Decree No. 91/2018/ND-CP dated June 26, 2018 of the Government)

Where:

D_i: Minimum balance to be maintained at month i

N: Debts to be paid in the next payment period

t: Number of months in a repayment period

i: Ordinal number of the month in which the balance is calculated in a repayment period