WHERE TO SUBMIT APPLICATION TO CONVERT LOAN INTO INVESTMENT CAPITAL?
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 debt into investment capital. However, I still don't know which agency to apply for the procedure. So, Lawyer, let me ask: Where can I apply to convert debt into investment capital? Looking forward to your company's answer. Thank you!
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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
The globalization process is strongly promoting the integration of countries into the world and regional economy. Among them, foreign direct investment is an activity that occupies an increasingly important position for both investing and receiving countries, especially developing countries like Vietnam. Investment capital from abroad is an important means of promoting the development of the national economy. Currently, in Vietnam, many foreign investors are coming to invest in investment projects on small to large scales. 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 contributed capital of the business. At this time, the investor needs to carry out procedures to legalize the conversion of the loan into contributed capital. However, when customers carry out the procedures, they encounter many difficulties and problems because they do not know which agency to submit the documents to. Through the article below, we - TLK Law Firm will help you answer questions related to Where to submit documents to convert loan into investment capital?
Photo 1. Where to submit an application to convert a loan into investment capital? _ Hotline: 0972118764
I. SOME IMPORTANT LEGAL ISSUES RELATED TO CONVERTING LOAN INTO INVESTMENT CAPITAL
1. Forms of foreign debt repayment not through loan accounts
Pursuant to Circular No. 12/2022/TT-NHNN, forms of foreign debt repayment not through loans include:
(1) Repayment of debt in the form of providing goods and services to the lender;
(2) Debt repayment through the lender and the borrower agreeing to convert the outstanding debt into shares or capital contribution in the borrower;
(3) Debt 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 debt through the borrower's account opened abroad (in case the borrower is allowed to open an account abroad to make a foreign loan).
Thus, the law now allows investors to convert foreign loans into investment capital. This is one of the forms of foreign debt repayment without going through a loan account.
=> See more: What documents need to be prepared for an investment project capital increase application?
2. Procedures to be followed when converting debt into investment capital
2.1. Procedures for adjusting 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 or split a project into multiple 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.
2.2. Procedures for notification of loan conversion into contributed capital
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.
3. Where and how to submit documents to convert loan debt into investment capital
3.1. Procedures for adjusting Investment Registration Certificate
Pursuant to the Investment Law 2020, investors submit documents to adjust the Investment Registration Certificate to the competent Investment Registration Agency as follows:
(1) Management Board of industrial parks, export processing zones, high-tech zones, and economic zones (for investment projects in industrial parks, export processing zones, high-tech zones, and economic zones);
(2) Department of Planning and Investment (for investment projects outside industrial parks, export processing zones, high-tech zones, and economic zones);
(3) Investment registration agency where the investor implements the investment project, locates or plans to locate the executive office to implement the investment project for the following investment projects:
- Investment projects implemented in 02 or more provincial administrative units;
- Investment projects implemented inside and outside industrial parks, export processing zones, high-tech parks and economic zones;
- Investment projects in industrial parks, export processing zones, high-tech zones, economic zones where the Management Board of industrial parks, export processing zones, high-tech zones, economic zones have not been established or are not within the scope management of the Management Board of industrial parks, export processing zones, high-tech zones, and economic zones.
3.2. Procedures for notifying debt conversion into investment capital
Pursuant to Circular No. 12/2022/TT-NHNN, when converting a loan into investment capital, the borrower sends a notice with related documents to the bank providing account services.
3.3. How to submit application
Investors carrying out the procedures can submit documents to the competent authority in the following two ways:
- Submit directly to the headquarters of the competent authority to handle procedures (or through the One-Stop Department - if any); or,
- Send by post to the headquarters of the competent authority for settlement.
=> See more: What types of periodic reports must be submitted by foreign companies?
II. SUMMARY OF THE ANSWER SECTION: WHERE SHOULD I SUBMIT AN APPLICATION TO CONVERT LOAN INTO INVESTMENT CAPITAL?
Dear Customers, from the above synthesis and analysis, TLK Law Firm would like to give the following answer:
Thus, when converting debt into investment capital, investors must carry out 02 administrative procedures including: Procedures for adjusting the Investment Registration Certificate and Procedures for notifying loan conversion into investment capital. private.
For procedures to adjust the Investment Registration Certificate, investors send documents to the competent Investment Registration Authority as follows:
Pursuant to the Investment Law 2020, investors submit documents to adjust the Investment Registration Certificate to the competent Investment Registration Agency as follows:
(1) Management Board of industrial parks, export processing zones, high-tech zones, and economic zones (for investment projects in industrial parks, export processing zones, high-tech zones, and economic zones);
(2) Department of Planning and Investment (for investment projects outside industrial parks, export processing zones, high-tech zones, and economic zones);
(3) Investment registration agency where the investor implements the investment project, locates or plans to locate the executive office to implement the investment project for the following investment projects:
- Investment projects implemented in 02 or more provincial administrative units;
- Investment projects implemented inside and outside industrial parks, export processing zones, high-tech parks and economic zones;
- Investment projects in industrial parks, export processing zones, high-tech zones, economic zones where the Management Board of industrial parks, export processing zones, high-tech zones, economic zones have not been established or are not within the scope management of the Management Board of industrial parks, export processing zones, high-tech zones, and economic zones.
For procedures for notifying loan conversion into investment capital, the investor (borrower) sends documents to the bank providing account services.
=> See more: What industries can foreign-invested enterprises operate in?
Photo 2. Where to submit an application to convert a loan into investment capital? _ 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: Where to submit application to convert loan into investment capital?
IV. SOME QUESTIONS RELATED TO CONVERTING LOAN INTO INVESTMENT CAPITAL
Question 1: Can I carry out the procedure to convert loan debt into investment capital online?
Reply:
The answer is yes.
Pursuant to Decree No. 31/2021/ND-CP and Circular No. 12/2022/TT-NHNN, investors (borrowers) are allowed to carry out online procedures for converting loan debt into investment capital. For procedures to adjust the Investment Registration Certificate, investors carry out procedures on the National Investment Information System. For notification procedures on converting loan debt into investment capital, investors carry out the procedures on the website managed by the State Bank.
Note: When performing online procedures via websites, investors must register an account at the website to carry out the corresponding administrative procedures.
Question 2: Is converting debt into investment capital without adjusting the Investment Registration Certificate subject to sanctions?
Reply:
The answer is yes.
Pursuant to Decree No. 122/2021/ND-CP, foreign investors do not carry out procedures to adjust the Investment Registration Certificate in case the adjustment of the investment project changes the content of the Certificate. If you accept investment registration, you will be fined from 70,000,000 VND to 100,000,000 VND.
In addition, after being fined, the investor is also subject to remedial measures by the competent authority: forced to carry out procedures to adjust the Investment Registration Certificate at the relevant Investment Registration Agency.
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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