The Role of HĐTDNM in Arranging Capital for Investment and Development Projects of Vietnamese Enterprises

relating to the matters requiring YKPL. Normally, the Lender requires an independent lawyer who is competent, experienced, and has sufficient reputation to take responsibility for the legal issues on which he gives his opinion.

For international credit contracts that Vietnamese partners often sign in general and HDDTM in particular in Vietnam, in addition to the YKPL requirement of an independent lawyer, the Vietnamese Party often chooses BTP as the agency issuing YKPL because BTP is a specialized agency of the Government in charge of related legal issues and has the best understanding of the issues stated in YKPL.

1.2.6.3 YKPL content for the Contract and Letter of Guarantee

The issues that YKPL addresses are relevant legal issues that the Lender needs the YKPL issuer to confirm the legality of. The recipient of these YKPLs is usually the Lender. Typically, in relation to the HDDNM, there are two types of YKPLs that the Lender requires: (i) YKPL

Maybe you are interested!

for the Contract and (ii) YKPL for the Letter of Guarantee.

a) YKPL content for HDDTM

Lenders typically request the YKPL Legal Adviser for the HDDTM on the following aspects:

1) Is the Borrower legally incorporated? Does the Borrower have full capacity and authority to conduct its current business?

2) Does the Borrower have the authority and full legal basis to implement the Project as well as borrow credit according to the provisions of the HDDNM and sign the documents of the TDNM loan?

3) Has the Borrower obtained all required licenses or authorizations to enter into and perform the Export Contract?

4) Are the credit documents legally executed and do any legal obligations set forth in those documents constitute a binding commitment to the Borrower?

5) Does the execution of the credit documents and the Borrower's performance of any obligations arising from them conflict with or violate the provisions of the Borrower's organizational and operational regulations or violate any other obligations of the Borrower under any other Contract to which the Borrower is or may be a Contracting Party?

6) Does the execution and execution of the relevant documents of the HDDTM conflict with any law, regulation, decree, order or public order?

7) Is there any requirement for any stamping, registration, payment of any financial obligation or authorisation in relation to the documents of the HDDTDNM, (a) to ensure the validity of the obligations under the

specified in such documents and (b) to draw up such documents in accordance with the laws of the Borrower's country and to ensure the validity and enforceability of such documents and the payment of financial obligations specified in such documents?

8) Are all payments that the Borrower is obliged to make under the Lender subject to any tax, charges or withholding under the laws of the Borrower's country (including administrative, stamp or registration costs)?

9) Will the Lender, in any event, be deemed to be resident or domiciled or to carry on business or be subject to tax in Vietnam by virtue of having entered into or executed the documents of the Lender?

10) Are the documents of the HDDNM legal documents valid and governed by commercial law?

11) Will the Borrower be deemed to have waived any exemptions to which the Borrower is or may be entitled under applicable law and/or by virtue of the signing of the LTM?

12) Will any claims relating to the Lenders be entitled to rights at least equal to those of any unsecured creditors of the Borrower?

13) Is it legal for the Borrower to choose the Law of a particular country (e.g. the law of the French Republic) to govern its obligations under the documents of the Lending Agreement?

14) Whether the validity of such choice of law is

certified by the competent authority of the Borrower's country?

15) Is the Borrower's selection of an arbitration panel as provided for in the Lender Agreement as the competent authority to adjudicate disputes that may arise valid under the laws of the Borrower's country?

16) Whether such an Arbitral Award shall be recognized and enforced by the decision of the Court of the Borrower's country without any further decision being required as to the determination of the case or as to the procedures to be followed?

b) Content of legal opinion on Letter of Guarantee

For Letters of Guarantee, the Lender usually requests the Legal Adviser to YKPL on the following aspects:

1) Does the Guarantor have full capacity and authority to sign the Guarantee?

2) Under the provisions of the law of the Guarantor's country, whether the Guarantor has

full authority to sign this Guarantee in accordance with the provisions of the Guarantee and is the representative of the Guarantor fully authorized to sign the Guarantee?

3) Whether the Guarantor has been granted by the competent state authority of the Guarantor's country all necessary authorizations under the laws of the Guarantor's country including regulations on financial relations with foreign banks to ensure the validity of the Guarantee and thereby allow

Has the Guarantor entered into and performed its obligations under the Guarantee? Does the Guarantor need any specific authorization to perform its payment obligations under the Guarantee?

4) Whether the Letter of Guarantee has been duly executed and whether any legal obligations set forth in the Letter of Guarantee constitute a valid, irrevocable and unconditional commitment of the Guarantor?

5) Does the signing and execution of the Letter of Guarantee including the decision to grant the guarantee conflict with any law, regulation, statute, decree of the Guarantor's country?

6) Are there any provisions in the Letter of Guarantee that conflict with the fundamental principles of the Guarantor's country?

7) Is there any requirement for any stamping, registration, payment of any financial obligation or any authorization in connection with the Letter of Guarantee, (a) to ensure the validity of the obligations under the Letter of Guarantee and (b) to establish the Letter of Guarantee in accordance with the laws of the Guarantor's country and to ensure the validity of the Letter of Guarantee and the payment of the obligations under the Letter of Guarantee?

8) Are the payments that the Guarantor is obliged to make under the Letter of Guarantee subject to any deductions, deductions, or deductions for taxes or expenses under the laws of the Guarantor's country?

9) Will the Lender, in any event, be deemed to be resident or domiciled or to carry on business or to be subject to tax in the Guarantor's country by reason of having entered into or executed the Letter of Guarantee?

10) Has the Guarantor waived any exemptions to which the Guarantor is or may be entitled under applicable law and/or by virtue of the execution of the Letter of Guarantee?

11) Are claims in respect of the Letter of Guarantee entitled to rights at least in the same class as the claims of any unsecured creditors of the Guarantor?

12) Is it legal for the Guarantor to choose the Law of a particular country (e.g. France) to govern its obligations under the Letter of Guarantee?

13) Whether the validity of such choice of applicable law is confirmed by the competent state authority of the Guarantor's country?

14) Whether the Borrower's selection of an arbitration panel as specified in the Letter of Guarantee as the competent authority to adjudicate any disputes arising is in accordance with the provisions of the laws of the Guarantor's country?

15) Will such an arbitral award be recognized and enforced by the decision of the Court of the Guarantor State under the New York Convention of 1958 and the law on Recognition and Enforcement in the Guarantor State of Foreign Arbitral Awards?

1.3 THE ROLE OF THE BUYER'S CREDIT AGREEMENT

1.3.1 The role of HDDNM in arranging capital for investment and development projects of Vietnamese enterprises

Currently, Vietnamese enterprises have been implementing many investment and development projects according to the economic development strategy of the country, industry and enterprise. The implementation of such projects requires a large amount of capital that not all enterprises can meet.

In that context, the HDDTDNM, as a legal document expressing the agreement between the Borrower and the Lender in the TDNM transaction, plays the following roles in the capital arrangement activities of enterprises:

(a) Open a new channel in capital arrangement for enterprises (in addition to their own capital and domestic bank loans). With the advantages of long credit terms and preferential interest rates, TDNM and HDDNM are of great interest to Vietnamese enterprises and are considered an important capital attraction channel in the process of implementing their Projects. Ignoring procedural difficulties to meet the requirements of the Lender under HDDNM, enterprises when implementing a project with a component of the investment project being the purchase of foreign equipment can easily find a bank to finance capital in the form of TDNM. Therefore, a large part of the capital needed to implement the Project will be resolved through this capital mobilization channel.

(b) Contribute to helping businesses have the opportunity to strengthen their management, especially project management and financial management, because

The conditions set for the Borrower according to the provisions of the HDDNM are very strict. These conditions must be met by the Borrower not only before signing the Credit Contract but also during the process of disbursement and repayment of the loan. If the Project management is not strengthened, especially the financial management of capital and cash flow for debt repayment, the Borrower is always at risk of violating the provisions of the Contract (falling into a "Fault Event"), which may lead to disbursement suspension or debt collection (must pay all debts immediately). However, if these management tasks are done well, the reputation of the enterprise will be guaranteed and the Lender will be ready to lend the next TDNM loans to implement the Projects.

other projects if needed. Thus, arranging capital for other future projects of the enterprise will be more convenient.

(c) It is a specific tool to enhance the capacity and reputation of the enterprise with foreign partners, especially financial institutions, banks and large credit organizations in the world. Thus, the intangible value (brand) of the enterprise will be enhanced, thereby helping the enterprise more easily arrange the necessary capital to implement other projects.

1.3.2 The role of the Enterprise Income Tax in import-export business activities of Vietnamese enterprises

For the current import-export business activities of Vietnamese enterprises, the Board of Directors has the following roles:

(a) The Lender Contract serves as an important legal instrument demonstrating the commitments of the Parties to mobilize capital for the import of machinery and equipment. The Lender Contract is a commitment from the Lender to the Borrower to disburse capital for the import of machinery and equipment on schedule and with the required quality of the relevant Project.

(b) The HDDNM acts as a very effective payment guarantee tool.

so that the Exporter can be confident that the Importer will pay in full and

on schedule for the Exporter according to the provisions of the Import Contract. Normally, when the Importer wants to import goods, the commonly used payment instrument is a Letter of Credit (L/C) or a Bank Payment Guarantee. In the import transaction of goods and services financed by the Import Contract (expressed through the Import Contract), there is no participation of the Letter of Credit or Bank Guarantee, but only the Import Contract between the Lender and the Borrower as a payment guarantee tool for import-export business transactions to ensure the ability to pay for the Importer when importing goods and services. For the Exporter, the Import Contract being signed and having the effect of disbursement is one of the prerequisites for the Export Contract to be signed and having the effect (i.e. the Exporter is assured about the payment issue for the Export Contract).

Chapter 2

LEGAL REGULATIONS RELATED TO BUYER CREDIT CONTRACTS AND PRACTICE OF SIGNING AND IMPLEMENTING BUYER CREDIT CONTRACTS IN VIETNAM

2.1 LEGAL REGULATIONS RELATED TO THE BUYER CREDIT AGREEMENT

2.1.1 Legal regulations of countries related to Buyer Credit Contracts

In general, countries do not have separate regulations on the TDNM framework or HDDNM, but only general regulations on credit granting and credit contracts. The regulations of countries related to credit granting and credit contracts are mainly in the Laws related to finance, banking, Commercial Code and Civil Code. For example, in France, issues related to credit and credit contracts are regulated scatteredly in the French Monetary and Financial Code, French Civil Code, French Commercial Code, French Consumer Code [34, 31, 32, 33] or in Japan, they are regulated in the Commercial Code of Japan, Interest Rate Restriction Law, Commercial Code of Japan, Banking Law of Japan, Law on Sales of Financial Products [27, 35, 27, 26, 36] or in Germany, they are regulated in the Civil Code. Civil Code of Federal Republic of Germany, Banking Act of Federal Republic of Germany... [25, 23].

French Commercial Code considers lending as a commercial act.

governed by commercial law as provided in Article 110-1 of the Commercial Code.

Comment