DOES CONVERTING A LOAN INTO INVESTMENT CAPITAL REQUIRE ADJUSTING THE CONTENT OF INVESTMENT REGISTRATION CERTIFICATE?
QUESTION
Dear TLK Law Firm, we hope that your company will answer to the following problem: My company is a foreign company in Vietnam. Currently, we need to carry out procedures to convert loans into investment capital. However, I still do not clearly understand the regulations on this issue. Does converting a loan into investment capital require adjusting the content of the investment registration certificate? Looking forward to your company's answer. Thank you!
RELATED ARTICLES
1. Where to submit application to convert loan into investment capital?
2. Conditions for increasing investment capital?
3. Services for converting loan capital into contributed capital in 100% foreign-owned companies
Thank you for your trust and sending questions to TLK Law Firm. Based on legal regulations and practical solutions, we would like to send you the following consulting content:
LEGAL BASIS
1. Investment Law No. 61/2020/QH14 passed by the National Assembly on June 17, 2020;
2. Decree No. 31/2021/ND-CP issued by the Government on March 26, 2021 detailing and guiding the implementation of a number of articles of the Investment Law;
3. Decree No. 122/2021/ND-CP issued by the Government on December 28, 2021 regulating penalties for administrative violations in the field of planning and investment;
4. Other legal documents providing relevant guidance.
CONSULTATION CONTENT
Currently, in Vietnam, many foreign investors are coming to invest in investment projects from small to large scales. This comes from the fact that our Government and State have issued many preferential policies for foreign investors to promote trade activities between Vietnam and countries around the world and attract investment capital from abroad. During business operations and implementing investment projects, many investors need to mobilize capital from abroad through foreign loans. Due to operational needs, investors want to convert borrowed capital into investment capital. At this time, the investor needs to carry out procedures to legalize the conversion of the loan into investment capital. However, when customers carry out the procedures, they encounter many difficulties and obstacles because they do not know whether or not the content of the Investment Registration Certificate must be adjusted when converting a loan into investment capital. Through the article below, we - TLK Law Firm will help you answer questions related to whether converting loan into investment capital requires adjusting the content of the investment registration certificate?
Photo 1. Does converting loan into investment capital require adjusting the content of the investment registration certificate?_ Hotline: 0972118764
I. SOME IMPORTANT LEGAL ISSUES RELATED TO CONVERTING loan INTO INVESTMENT CAPITAL
1. What is converting a loan into investment capital?
Pursuant to Circular No. 12/2022/TT-NHNN, forms of foreign loan repayment not through loans include:
(1) Repayment of loan in the form of providing goods and services to the lender;
(2) loan repayment through the lender and the borrower agreeing to convert the outstanding loan into shares or capital contribution in the borrower;
(3) Loan repayment through the lender and the borrower agreeing to exchange the loan balance into shares or capital contribution owned by the borrower;
(4) Repayment of medium and long-term foreign loans through clearing receivables directly with the lender;
(5) Repay loan through the borrower's account opened abroad (in case the borrower is allowed to open an account abroad to make a foreign loan).
Thus, converting debt into investment capital is one of the forms of foreign debt repayment without going through a loan account recognized by Vietnamese law.
=> See more: What is required to adjust the investment certificate to increase capital?
2. Does converting debt into investment capital require adjusting the content of the Investment Registration Certificate?
In essence, when investors convert debt into investment capital, it is similar to calling for investment capital from outside. Therefore, this will cause project investment capital to increase.
Pursuant to the Investment Law 2020, during the implementation of an investment project, investors have the right to adjust goals, transfer part or all of the investment project, merge projects or divide, separate a project into many projects, use land use rights and assets on land under investment projects to contribute capital to establish enterprises, business cooperation or other contents and must be in accordance with the provisions of law.
Investors carry out procedures to adjust the Investment Registration Certificate in case the investment project adjustment changes the content of the Investment Registration Certificate.
Thus, when converting debt into investment capital, investors need to register to increase the capital of the investment project. That is, the investor must make adjustments to the capital content recorded in the previously issued Investment Registration Certificate to ensure the accuracy of the information recorded on the Investment Registration Certificate issued by a competent authority for that investment project.
3. What is the penalty level for not adjusting the Investment Registration Certificate when converting debt into contributed capital?
Investors carry out procedures to adjust the Investment Registration Certificate in case the investment project adjustment changes the content of the Investment Registration Certificate according to the provisions of the Investment Law 2020.
According to Decree No. 122/2021/ND-CP, Do not carry out procedures to adjust the Investment Registration Certificate in case the adjustment of the investment project changes the content of the Investment Registration Certificate. Penalties for administrative violations with fines ranging from 70,000,000 VND to 100,000,000 VND. At the same time, violating enterprises are also forced to carry out procedures to adjust the overseas investment registration certificate for their violations.
=> See more: Can a foreign company establish a subsidiary in Vietnam? What are conditions?
II. SUMMARY OF THE ANSWER SECTION: DOES CONVERTING LOAN INTO INVESTMENT CAPITAL HAVE TO ADJUST THE CONTENT OF THE INVESTMENT REGISTRATION CERTIFICATE?
Dear Customers, from the above synthesis and analysis, TLK Law Firm would like to give the following answer:
When converting debt into investment capital, it increases the investment project capital and changes the content on the Investment Registration Certificate. Therefore, investors must make adjustments to the Investment Registration Certificate when converting debt into investment capital at the competent Investment Registration Agency.
=> See more: Can foreign investors contribute capital to 100% Vietnamese-owned companies?
Photo 2. Does converting a loan into investment capital require adjusting the content of the investment registration certificate? _ Hotline: 0972118764
III. HOW SHOULD YOU BEST CHOOSE AN ORGANIZATION THAT PROVIDES LEGAL SERVICES?
An organization providing quality and reputable legal services should have the following criteria:
First: Must be an official legal organization with a legal operating license;
Second: It is better if the Board of Directors must be lawyers, experienced and have high degrees;
Third: Have a team of lawyers and a systematic, professional, and thoroughly trained human resources system;
Fourth: Friendly, dedicated and make every effort for the benefit of customers. Consider customer satisfaction and work quality as your own honor;
Fifth: Professional, thoughtful, flexible and logical service provision process to optimize work performance and save customers' time;
Sixth: Reasonable and competitive service prices;
Seventh: Rich services in both fields of supply and service packages in the same field for customers to choose the appropriate service package, as well as comprehensive support for customers throughout the operation process. movement;
Eighth: Have the ability to Connect - Promote commercial relationships for customers if customers have needs,...
Finding a comprehensive, professional and reputable legal consulting organization is what every customer wants. Because no one wants to risk losing both money and time when the results are not as expected. However, finding such an organization is not easy because the number of service providers in the Vietnamese market today is very large with varying quality.
A suggestion for you: Although our TLK Law Firm does not dare to claim to be the best legal service provider on the market, we satisfy all of the above criteria and more will definitely be a good choice for you.
=> See more: What documents need to be prepared for an investment project capital increase application?
IV. SOME QUESTIONS RELATED TO CONVERTING LOAN INTO INVESTMENT CAPITAL
Question 1: In addition to procedures for adjusting the Investment Registration Certificate, do investors need to carry out any additional procedures when converting debt into contributed capital?
Reply:
The answer is: Carry out notification procedures to the bank providing account services.
Pursuant to Circular No. 12/2022/TT-NHNN, within 05 working days from the date of converting loan debt into investment capital, the borrower is responsible for notifying and sending documents proving that the debt has been converted into investment capital. Currently converting debt into investment capital so that the bank providing account services knows and continues to monitor the borrower's foreign loan.
Question 2: What should I do if the electronic investment registration certificate has incorrect information?
Reply:
The answer is you should carry out procedures to correct information on the Investment Registration Certificate.
Pursuant to Decree No. 31/2021/ND-CP, in case the information on the Investment Registration Certificate is not accurate compared to the registration information in the investment procedure application file, the Investment Registration Authority Investor corrects information on the Investment Registration Certificate within 03 working days from the date of receiving the investor's request.
Question 3: Do I have to pay an additional deposit to convert debt into investment capital?
Reply:
The answer is yes.
Pursuant to Decree No. 31/2021/ND-CP, in case of adjusting to increase the project's investment capital, the investor must pay an additional deposit amount or supplement a deposit guarantee from the corresponding credit institution with increased investment capital as prescribed in the decision approving the adjustment of investment policies and the adjusted Investment Registration Certificate.
=> See more: What types of periodic reports must be submitted by foreign companies?
Above is some general advice that we would like to offer to our customers. As a service provider, we always understand and are ready to accompany and solve the needs and difficulties that customers are facing. If you still have questions or need more in-depth advice, please contact the hotline: 0972118764 to receive direct advice from a lawyer (completely free consultation).
Thank you very much!
Administrative Procedures Department - TLK Law Firm
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