THE GOVERNMENT -------	SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness ---------------
No. 34/2018/ND-CP	Hanoi, March 8, 2018

 

DECREE

ON ESTABLISHMENT, ORGANIZATION AND OPERATION OF CREDIT GURANTEE FUNDS FOR MEDIUM AND SMALL ENTERPRISES

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

Pursuant to the Law on State Budget dated June 25, 2015;

Pursuant to the Civil Code dated November 24, 2015;

Pursuant to the Law on credit institutions dated June 16, 2010 and Law on amendments to the Law on credit institutions dated November 20, 2017;

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

Pursuant to the Law on support for SMEs dated June 12, 2017;

At the request of the Minister of Finance;

The Government promulgates a Decree on establishment, organization and operation of credit guarantee funds for small and medium-sized enterprises.

Chapter I

GENERAL PROVISIONS

Article 1. Scope and regulated entities

1. Scope

The Decree hereby provides for the establishment, organization and operation of credit guarantee funds in centrally-affiliated cities and provinces (hereinafter referred to as credit guarantee fund or Fund) in order for small and medium-sized enterprises (hereinafter referred to as SMEs) to take out loans from lenders as prescribed herein.

2. Regulated entities

a) Credit guarantee funds;

b) Lenders prescribed herein;

c) Beneficiaries of credit guarantee funds in accordance with Article 15 and 16 of this Decree;

d) Entities involved in the implementation of this Decree.

Article 2. Legal status and obligations to state budget of credit guarantee funds

1. “credit guarantee fund” means an off-budget financial fund which is established by the People’s Committee of province or central-affiliated city (hereinafter referred to as province) and operates for non-profit, capital maintenance and development purposes; extend credit guarantees to SMEs as prescribed in this Decree and relevant laws. The credit guarantee fund operates in the form of a single-member limited liability company whose charter capital is wholly held by the state as prescribed in this Decree No. and relevant laws.

2. The credit guarantee fund has legal status, charter capital, separate financial statements, stamp and is entitled to open its account at the State Treasury and commercial banks lawfully operating in Vietnam as per the law.

3. A credit guarantee fund that generates revenue from credit guarantee extending as prescribed in this Decree is exempt from corporate income tax. A credit guarantee fund generates revenue from activities other than credit guarantee extending must pay taxes in accordance with regulations of law on taxation.

Article 3. Interpretation of terms

For the purposes of this Decree, these terms below shall be construed as follows:

1. “credit guarantee” refers to a commitment to a lender by the credit guarantee fund to assume the financial obligation of a borrower (obligor) if that debtor fails to discharge the obligation when due or discharge the obligation unproperly and inadequately under the credit guarantee contract and as per the law. The obligor is bound to be indebted and is obliged to repay the sum of money that the Credit Guarantee Fund has paid to recover debts on their behalf.

2. “guarantor” refers to a credit guarantee fund for small and medium-sized enterprises incorporated and operating in accordance with this Decree.

3. “obligor” refers to those, as stipulated in Article 15 of this Decree, who are provided with the credit guarantee.

4. “obligee” refers to lenders as prescribed by law, extending credits to the obligor.

5. “lender” refers to credit institutions and state financial funds having lending function as per the law.

6. “credit guarantee contract” refers to a written amongst 2 parties: the guarantor and the obligor or 3 parties: the guarantor, the obligee and the obligor under which the guarantor shall be bound to act on behalf of the obligor to take on financial obligations that the obligor fails to fulfill or does not comply with as agreed upon to the obligee.

7. “credit guarantee certificate" refers to a written commitment of the guarantor to the obligee on which the guarantor agrees to act on behalf of the obligor to fulfill their financial obligations under which the obligor fails to repay or makes insufficient and late repayment on the agreed loan to the obligee.

8. “principal debt obligation” refers to a principal due under the credit contract or adjusted credit contract under guarantee scope of the guarantor that the obligor fails to repay or make insufficient repayment and this amount of debt is eligible for the guarantor to repay under the credit guarantee contract and this Decree.

9. “customer” refers to a SME as prescribed by law on SMEs which takes out a loan from a lender and guaranteed by a credit guarantee fund.

10. “relevant entities” refers to organizations and individuals prescribed in Clause 28 Article 4 of the Law on credit institutions 2010 and its amendments (if any).

Article 4. Operational rules of credit guarantee fund

1. The credit guarantee fund operates under rules of exercising financial autonomy and capital adequacy assurance.

2. The credit guarantee fund takes on limited liability within its owner's equity.

3. The credit guarantee fund is only entitled to extend credit guarantees related to a loan with eligible entities and qualified guarantee as prescribed in this Decree.

4. The credit guarantee fund, when considering extending credit guarantee, shall give priority to SMEs in preferential fields or sectors as prescribed in this Decree.

Chapter II

ESTABLISHMENT, FUNCTIONS, TASKS AND ORGANIZATIONAL STRUCTURE OF CREDIT GUARANTEE FUND

Article 5. Conditions for establishment of credit guarantee fund

1. Actually have at least VND 100 billion of charter capital at the time of establishment allocated by the provincial budget.

2. Have the scheme for establishment of credit guarantee fund submitted by the People's Committee of province and approved by the People’s Council of province. The scheme must at least contain contents prescribed in Clause 1 Article 6 hereof.

3. Have a draft of charter of organization and operation of credit guarantee fund in conformity with this Decree and other relevant laws.

4. Have a list of expected members of credit guarantee fund including: President, Controller, Director, Deputy Director and Chief Accountant of credit guarantee fund who are qualified as prescribed in Articles 10, 11, 12 and 13 of this Decree.

Article 6. Processes of establishment of credit guarantee fund

1. When there is a need to establish a credit guarantee fund, the People's Committee of province shall formulate a scheme for establishment of credit guarantee fund and then submit it to People’s Council of province for approval. The scheme for establishment of credit guarantee fund shall at least contain:

a) The need for establishment of credit guarantee fund, its contribution to the provincial socio-economic development; scale, scope, operation and its impact on provincial socio-economic development;

b) Its operational plan and sources of funds, representing sources of charter capital allocated in the capital expenditures of local government budget (in the mid-term public investment plan approved by the competent authority) in accordance with Clause 1 Article 5 hereof;

c) Have a draft of charter of organization and operation of credit guarantee fund in conformity with this Decree and other relevant laws;

d) Have a list of expected members including President, Controller, Director, Deputy Director and Chief Accountant of credit guarantee fund who are qualified as prescribed in this Decree;

dd) Demonstration of organizational structure and operating mechanism of credit guarantee fund as stipulated in this Decree;

e) Operation plan of credit guarantee fund prescribed in Article 14 of this Decree;

g) Financial and operational plan of credit guarantee fund for 5 years since establishment and estimated performance to prove the feasibility of the establishment.

2. If the establishment conditions are satisfied and the establishment is considered feasible, the People’s Council of province shall consider the following matters related to the establishment of credit guarantee fund: charter capital and sources of charter capital, called-up capital, model and organizational apparatus and other matters related to the credit guarantee fund under requirements of the People’s Council of province.

3. According to the scheme for establishment of credit guarantee fund prescribed in Clause 1 hereof approved by the People’s Council of province, the People's Committee of province issues an establishment decision and a decision on approval for charter of organization and operation of the credit guarantee fund.

4. Within 30 days from issuance of the decision on establishment of credit guarantee fund, the People's Committee of province shall give notices to the Ministry of Finance, the State Bank of Vietnam, the Ministry of Planning and Investment together with the establishment decision and the decision on approval for charter of organization and operation of the credit guarantee fund.

5. Within 30 days from issuance of the decision on establishment of credit guarantee fund, the credit guarantee fund shall publish its establishment on means of mass media.

6. Within 90 days from issuance of establishment decision of credit guarantee fund, the local government budget shall allocate full charter capital as prescribed in Clause 1 Article 5 of this Decree.

Article 7. Charter for the organization and operation of Credit Guarantee Fund

The Charter for the organization and operation of credit guarantee fund shall be approved by the President of the People’s Committee of province, at least containing:

1. Name and address of main office.

2. Legal status, legal representative.

3. Content and scope of operation.

4. Term of operation.

5. Charter capital of credit guarantee fund.

6. Qualifications for appointment and tasks and powers of the President, Controller, Director, Deputy Director and chief accountant of credit guarantee fund as prescribed in this Decree.

7. The recruitment, planning and appointment of other leader titles of the credit guarantee fund.

8. Principles of financial management, applied to the credit guarantee fund.

9. Procedures for any amendment to the charter of credit guarantee fund.

10. Partnership of credit guarantee fund with regulatory authorities, obligees and obligors.

11. Approaches to dispute, restructuring, dissolution, bankruptcy to be taken by the credit guarantee fund as prescribed in this Decree and relevant laws.

12. Other matters as required by the People's Committee of province in accordance with this Decree and relevant laws.

Article 8. Responsibilities and entitlement of credit guarantee fund

1. Responsibilities of credit guarantee fund.

a) Extend credit guarantees to eligible SMEs meeting conditions prescribed in this Decree;

b) Use capital with proper purposes to extend credit guarantees to SMEs;

c) Apply regulations on accounting, statistics and financial statements prescribed in this Decree and relevant laws;

d) Be subject to inspection and audit of competent authorities as per the law;

dd) Provide data and publish its operation regulations, financial regime, financial plans, performance and annual financial statements that are audited as prescribed in this Decree and relevant laws;

e) Buy property insurance, risk insurance in credit guarantee activities and other types of insurance as prescribed in law to maintain the safety of the credit guarantee fund;

g) Strictly comply with laws of the state and relevant laws on operation of credit guarantee funds.

2. Entitlements of credit guarantee fund

a) Operate in conformity with its objectives and scope as prescribed in this Decree;

b) Choose investment projects, business plans which are deemed feasible and efficient and conformable with the socio-economic development plan of the People's Committee of province and meet statutory conditions to extend credit guarantees;

c) Recruit, employ and train employees as prescribed in this Decree, the charter of organization and operation of credit guarantee fund and relevant laws;

d) Refuse any request for information disclosure and provision of resources made by any individual or organization if this request is in contravention of laws and regulations and charter of organization and operation of the credit guarantee fund.

Article 9. Organization and operation of credit guarantee fund

The management and operation of credit guarantee fund shall be structured with the inclusion of

1. President of credit guarantee fund.

2. Controllers.

3. Board of Management composed of: Director, Deputy Directors, chief accountant and assisting apparatus.

Article 10. President of credit guarantee fund

1. The President of credit guarantee fund who is appointed by the President of People’s Committee of province shall work as a full-time job if the Fund organizes an independent executive apparatus as prescribed in Point a Clause 1 Article 14 hereof.

2. Qualifications for appointment as a President of credit guarantee fund

a) Be a Vietnamese citizen as per the law;

b) Have full legal capacity and attain fitness to work;

c) Obtain a bachelor’s degree or higher, have at least 5 years’ managerial experience in economics, finance, banking, law, accounting, audit, securities, or insurance sector;

d) Be not spouse, natural parent, adoptive parent, natural child, natural sibling, brother or sister in-law of the President, Deputy President of the President of People’s Committee of province; Director, Deputy Director and chief accountant of the credit guarantee fund;

dd) Other qualifications as required by the People's Committee of province in accordance with charter of organization and operation of credit guarantee fund.

3. Responsibilities and entitlements of President of credit guarantee fund

a) Decide annual, medium and long-term strategies, operational plans, and financial plans of the credit guarantee fund with the consent of the People's Committee of province;

b) Approve financial statements, profit sharing, build up annual funds of the credit guarantee fund with the appraisal issued by controllers and the consent of the People's Committee of province;

c) Decide operational plans, payroll, organizational apparatus of the credit guarantee fund as prescribed in this Decree, charter of organization and operation of the credit guarantee fund and relevant laws after receiving the People's Committee of province’s approval;

d) Promulgate regulations on extending of credit guarantees, regulations on financial management and capital mobilization, regulations on management and use of funds, regulations on risk handling and other internal documents prescribed herein and charter of organization and operation of the credit guarantee fund with approval of the People's Committee of province;

dd) Decide the planning, appointment, dismissal, conclusion and termination of contracts, commendation, disciplinary actions of managerial positions in the credit guarantee fund within their competence prescribed in this Decree and charter of organization and operation of credit guarantee fund

e) Decide or authorize the Director to decide plan for fundraising, investment, construction, sale/purchase of fixed assets and other activities within their competence prescribed in prescribed in this Decree and charter of organization and operation of credit guarantee fund and relevant laws;

g) Exercise other entitlements and fulfill other responsibilities as required by the People's Committee of province prescribed in prescribed in this Decree and charter of organization and operation of credit guarantee fund.

Article 11. Controllers of credit guarantee fund

1. Controllers of credit guarantee fund who are appointed by the People's Committee of province to assist the People's Committee of province to control the management and administration of the President and Director of credit guarantee fund and other matters.

2. Qualifications for appointment as a controller:

a) He/she meets qualifications prescribed in Points a, b, d and dd Clause 2 Article 10 hereof;

b) He/she obtains a bachelor’s degree or higher, has at least 3 years’ managerial experience in economics, finance, banking, law, accounting, audit, securities, or insurance sector.

3. Working regulations, responsibilities and entitlements, appointment of controllers, relationship between controller and relevant entities and other matters shall be regulated by the operation regulation of controllers of credit guarantee fund issued by the People's Committee of province, in accordance with this Decree and relevant laws.

Article 12. Director of credit guarantee fund

1. Qualifications for appointment as a Director of credit guarantee fund as prescribed in Clause 2 Article 10 hereof.

2. Responsibilities and entitlements of Director of credit guarantee fund

a) Administer all activities of the credit guarantee fund; implement and evaluate the implementation of decisions made by the President of credit guarantee fund and the President of People’s Committee of province;

b) Deal with daily issues of the credit guarantee fund; decide plans for investment, fundraising, fund use, plans for purchase, sale, renting, liquidation of assets and other matters within his/her competence as prescribed in this Decree and charter of organization and operation of credit guarantee fund;

c) Propose long or medium-term strategies, operational plans, financial plans and formulate annual plans, staff and pay plans and then submit them to President of credit guarantee fund for consideration as prescribed in prescribed in this Decree and charter of organization and operation of credit guarantee fund; and then implement these plans after they are approved by competent authorities;

d) Issue internal documents and other regulations relevant to operation of the credit guarantee fund as prescribed in this Decree and charter of organization and operation of credit guarantee fund;

dd) Request President of credit guarantee fund to decide the planning, appointment, dismissal, commendation, disciplinary actions of managerial positions in the credit guarantee fund prescribed in this Decree and charter of organization and operation of credit guarantee fund;

e) Exercise other entitlements and fulfill other responsibilities as required by the President of credit guarantee fund and the President of People's Committee of province prescribed in prescribed in this Decree and charter of organization and operation of credit guarantee fund.

Article 13. Deputy Director, chief accountant and assisting apparatus of credit guarantee fund

1. Deputy Director of credit guarantee fund

a) Deputy Director of the credit guarantee fund assists the Chief Executive as designated and authorized by the Director; be held accountable to Director and the law in terms of their designated and authorized duties. The President of credit guarantee fund shall decide the composition and number of Deputy Directors according to the scale and operation characteristics of the credit guarantee fund during its operation after receiving the approval from the People's Committee of province;

b) Qualifications for appointment as a Deputy Director of credit guarantee fund as prescribed in Clause 2 Article 11 hereof.

2. Chief accountant of credit guarantee fund

a) The chief accountant of credit guarantee fund shall carry out accounting and statistics tasks as designated and authorized by the Director in accordance with laws and regulations on accounting and relevant laws; assist the Director to supervise the financial activities of the credit guarantee fund as prescribed in law on finance and accounting; be held accountable to Director and President of credit guarantee fund and the law in terms of performance of tasks and entitlements;

b) Apart from the qualifications for appointment prescribed in Clause 2 Article 11 hereof, the chief accountant must meet the qualifications prescribed in Article 53, Article 54 of the Law on accounting dated November 20, 2015.

3. The assisting apparatus of credit guarantee fund consists of specialized departments and divisions which advise and assist the President and Director to manage the credit guarantee fund.

Article 14. Administration of credit guarantee fund’s operations

1. Administration of credit guarantee fund’s operations shall be carried out through the application of one of the following methods:

a) Establish an independent management apparatus of credit guarantee fund at the locality;

b) Delegate the local state financial funds to manage operation of the credit guarantee fund.

2. If the apparatus operates under delegation model as prescribed in Point Clause 1 hereof:

a) The credit guarantee fund must be established by the People's Committee of province as prescribed in Article 5 and Article 6 of this Decree;

b) The local financial fund manages the credit guarantee fund under a delegation agreement between two parties, indicating: scope of delegation, organizational apparatus (composed of: President, Director and controller); detailed delegation; delegation process; responsibilities, duties and entitlements between the delegator and the entrusted party and relevant contents.

3. Depending on the circumstances in provinces, the People's Committee of province shall select the proper and effective method of operation of credit guarantee fund and the written delegation as prescribed in this Article in accordance with this Decree and relevant laws.

Chapter III

OPERATIONAL ACTIVITIES OF CREDIT GUARANTEE FUND

Article 15. Beneficiaries of credit guarantees

1. Beneficiaries of credit guarantee funds are SMEs prescribed in the Law on support for SMEs and its guiding documents, which have growth potential but are not eligible for access to credit in the preferential sectors as prescribed in this Decree.

2. SMEs taking out loans for investment and business purposes in the following sectors are given priority to be granted extend credit guarantees:

a) Preferential sectors for credit extending under guidance of the State Bank of Vietnam in each period;

b) Sectors or projects in the preferential sectors of local socio-economic development in each period.

3. According to Clause 2 of this Article, the People's Committee of province shall issue a list of preferential industries and sectors for local socio-economic development in each period that the Fund considers to extend credit guarantees as prescribed in this Decree.

Article 16. Conditions for extending credit guarantees

Beneficiaries of credit guarantees in accordance with Article 15 of this Decree are only granted credit guarantees when they meet the following conditions:

1. Prepare their effective and creditworthy investment projects, production and business plans.

2. Investment projects, production and business plans shall be assessed and subject to the decision to extend the credit guarantee in accordance with provisions set out in this Decree.

3. There is an investment or business plan in which owner’s equity accounts for at least 20% at the time when the credit guarantee fund considers the beneficiary for guarantee granting.

4. When applying for the guarantee, the beneficiary does not incur any tax debt for 1 year or longer as prescribed in the Law on Tax Administration and non-performing loans at credit institutions. If the tax debt incurred due to objective reason, the beneficiary must have a certification of its superior tax authority.

5. There are security interests for loan guarantees as prescribed in Article 25 hereof.

Article 17. Scope of credit guarantee

1. The credit guarantee fund considers granting a credit guarantee up to 100% of loans (including working capital and medium or long-term capital) to a SME. According to the feasibility, level of risks of the beneficiary, project, business plan and financial resources of the credit guarantee fund, the credit guarantee fund shall decide specific amount of guarantee for the beneficiary.

2. The guarantees of the credit guarantee fund include:

a) Guarantee for the principal of a loan taken out by the obligor from a lender;

b) Guarantee for the interests of a loan taken out by the obligor from a lender;

c) Guarantee for the principal and interests of a loan taken out by the obligor from a lender, specified in the credit guarantee contract.

3. According to its own financial resources and administration, feasibility and level of risks of the beneficiary’s project or business plan, the credit guarantee fund shall decide the scope of credit guarantee as prescribed in Clause 2 hereof, specified in the credit guarantee contract.

Article 18. Credit guarantee term

1. The credit guarantee term shall be determined in conformity with the term of the loan agreed upon between the obligor and the obligee in the credit contract and specified in the credit guarantee contract and the guarantee certificate entered into between relevant parties as prescribed in this Decree.

2. During the credit guarantee term, if the obligor has no longer been classified as a SME as prescribed by law, the credit guarantee fund must keep granting the extend credit guarantee to the obligor based on the credit guarantee contract between them until the expiry of the credit guarantee term.

Article 19. Currency and credit guarantee limits

1. Credit guarantee currency is VND.

2. Limit of loan guarantee for investment: Total amount of credit guarantee granted to a single obligor or a single obligor and a related entity does not exceed 15% or 20% respectively of actual charter capital of the credit guarantee fund.

3. Limit of loan guarantee for working capital: Apart from the regulation on loan guarantee limit prescribed in Clause 2 hereof, the loan guarantee for working capital does not exceed the amount of equity of the obligor representing in its financial statement submitted to the tax authority the year before.

4. Total amount of credit guarantees extended to obligors prescribed in Clause 2 and Clause 3 hereof is not more than 3 times higher than the actual charter capital of the credit guarantee fund.

Article 20. Fees for credit guarantee activities

1. Fees for credit guarantee activities include:

a) Fees for appraisal of credit guarantee dossiers paid by the obligor to the credit guarantee fund together with the application for credit guarantee;

b) Fee for the credit guarantee shall be calculated on the basis of the guaranteed sum and guarantee term. The expiry date of fee payment specified in the guarantee contract under the agreement between the credit guarantee fund and obligor shall conform to the credit guarantee term.

2. The credit guarantee fund shall submit specific amounts of fees prescribed in Clause 1 hereof in every period to the People's Committee of province for decision.

3. The remission of credit guarantee fees are specified in Regulations on cases and sectors eligible for remission of credit guarantee fees issued by the President of People’s Committee of province at the request of the President of credit guarantee fund. Criteria for determining degrees of remission of credit guarantee fees include:

a) Sectors eligible for remission among preferential sectors in the provinces;

b) In conformity with financial resources of the credit guarantee fund;

c) The President of credit guarantee fund has the authority to approve specific cases of remission based on the request of the Director of credit guarantee fund.

Article 21. Application documents for the offer of credit guarantee

1. Application form for the offer of credit guarantee prepared by the obligor.

2. Documentary evidence that proves that the obligor has fulfilled all necessary requirements for the credit guarantee under provisions set out in Article 16 of this Decree and other relevant documents stipulated by the credit guarantee fund.

3. SMEs submit applications for credit guarantee to the credit guarantee fund in person in the same administrative division (where they register their business and are headquartered) or by post.

4. The Director of credit guarantee fund shall request the President of credit guarantee fund to issue specific regulations on required documents in the application for offer of credit guarantees as prescribed in this Article.

Article 22. Assessment of the application and credit guarantee decision

1. The guarantor shall be responsible for verifying if required documents in the application sent by the obligor are adequate; assessing efficiency and effectiveness, and loan repayment competence of investment projects, production and business plans and other guarantee conditions prescribed in this Decree.

2. The guarantor shall be responsible for formulating the process for assessing the efficiency and effectiveness, and loan repayment competence of investment projects, production and business plans submitted by the obligor, who sticks to the principles that the autonomy, sole and joint responsibility of persons concerned at the stage of credit guarantee assessment and decision must be respected.

3. No later than 30 days since valid application documents for the offer of credit guarantee were fully received, the guarantor must complete the consideration process for granting the credit guarantee to the obligor. The decision to grant the credit guarantee to the obligor shall be documented in the form of a guarantee contract between the guarantor, the obligee and the obligor. Where the application for the offer of credit guarantee is rejected, the guarantor must send a written notification to the applicant in which reasons for such rejection must be clearly stated.

Article 23. Credit guarantee contract

1. A credit guarantee contract is entered into by 02 parties (the guarantor and the obligor) or 03 parties (the guarantor, the obligee and the obligor) but it must comply with this Decree and at least contain:

a) Name and address of the guarantor, the obligor, and the obligee (in case of 3-party contract);

b) Location and date of the conclusion of credit guarantee contract;

c) Principal and interest repayment obligation;

d) Validity period and credit guarantee fees prescribed herein;

dd) Credit guarantee purposes and clauses;

e) Conditions for the guarantor’s securing guarantee obligations prescribed in Clause 2 Article 30 and Article 31 hereof;

g) Security interests for guarantees prescribed in Article 25 hereof;

h) Rights, duties and obligations of each party (the guarantor, the obligee and the obligor) during extending of credit guarantee as prescribed herein;

i) Agreed terms regarding debt collection methods executed by the obligee after the obligor defaults on the debt or repays insufficient debt to the obligee and methods to prove that the obligee has executed these methods before notifying the guarantor to secure guarantee obligations as prescribed herein;

k) Specific agreed terms to the case in which the guarantor shall act on behalf of the obligor to repay debts (including interests, time limit);

l) Agreed terms regarding settlement of disputes arising during execution of the credit guarantee contract;

m) Other relevant agreements required by the credit guarantee fund.

2. Whenever there is any change to contractual terms and conditions of credit contract, the obligor shall be responsible for notifying the guarantor for consideration and approval of such change. Any amendment and supplement to or termination of the credit guarantee contract must be agreed upon by contracting parties.

3. The credit guarantee fund shall make forms of credit guarantee contract in accordance with Clause 1 hereof and submit them to the President for approval.

Article 24. Guarantee certificate

1. The loan guarantee of the guarantor shall be documented in the form of a guarantee certificate.

2. Guarantee certificate shall consist of the following information:

a) Name and address of the guarantor, the obligee and the obligor;

b) Date of issuance, principal and interests repayment;

c) Conditions for the guarantor’s securing guarantee obligations;

d) Validity period of guarantee certificate;

dd) Documents related to application for guarantor’s securing guarantee obligations made by the obligee to the guarantor;

e) Rights, duties and obligations of parties during performance of the guarantee certificate; relevant regulations on the settlement of disputes (if any);

g) Debt collection methods executed by the obligee after the obligor defaults on the debt or repays insufficient debt to the obligee and methods to prove that the obligee has executed these methods before notifying the guarantor to secure guarantee obligations as prescribed herein;

h) Other agreements between relevant parties.

3. Any amendment and supplement to or termination of the guarantee certificate must be agreed upon by contracting parties.

Article 25. Security interests for loan guarantee

1. Security interests for loan guarantee of the credit guarantee fund prescribed herein include:

a) Property rights, existing property or off-plan property under ownership of the obligor or existing property of a third party;

b) Investment projects, business plans of the obligor that are feasible and capable of repaying debts as evaluated by the credit guarantee fund;

c) Credit rating of the obligor evaluated by the credit guarantee fund, proving that the obligor is capable of repay debts to the lender.

2. The credit guarantee fund shall evaluate and consider using single or multiple security interests to secure the loan guarantee and operation of the credit guarantee fund as prescribed herein. In case of exemption of collateral prescribed in Point a Clause 1 of this Article, the credit guarantee fund shall request the President to decide on security interests prescribed in Point b, Point c Clause 1 of this Article as prescribed in the Regulation on cases of exemption of collateral prescribed in Clause 4 of this Article.

3. In every case, the obligor shall reach agreement with the credit guarantee fund in terms of security interests and specify in the credit guarantee contract prescribed herein.

4. The credit guarantee fund shall request the President of People’s Committee of province to issue a Regulation on security interests, power to decide on security interests, and cases of exemption of collateral as prescribed in this Decree based on the following criteria: The preferential sectors of the province, financial situations of the obligor, level of risks of the projects, business plans and financial resources of the credit guarantee fund and other criteria required by the People's Committee of province.

Article 26. Rights and obligations of the obligor

1. Guarantor shall be vested with the right:

a) Request the obligor to provide documentary evidence that proves that the obligor has matched all necessary requirements for the credit guarantee under provisions set out in Article 16 of this Decree;

b) Request the obligee to withhold the loaning and collect loans ahead of maturity date whenever any signs of violation committed by the obligor against laws or terms and conditions agreed in the credit guarantee contract are detected;

c) Collect the fee for the credit guarantee as prescribed in Article 20 of this Decree;

d) Exercise the contractual rights agreed in the contract between the obligee and the obligor;

dd) Refuse to extend the credit guarantee to those who are not eligible for credit guarantee prescribed in Article 16 of this Decree;

e) Refuse to fulfill credit guarantee obligations in the cases prescribed in Clause 3 Article 31 and Article 32 of this Decree;

g) Initiate legal proceedings against the obligor due to the failure to fulfill contractual obligations;

h) Other rights agreed by contracting parties in accordance with legal regulations.

2. Guarantor's obligations:

a) Assess the financial plan and debt repayment plan of the investment project, production and business plan submitted by the obligor;

b) Cooperate with the obligee to inspect the process of loan capital utilization and loan repayment of the obligor as specified in the credit guarantee contract, guarantee certificate and this Decree;

c) Fulfill the obligations agreed in the contract between the obligee and the obligor;

d) If the guarantor holds collateral, the guarantor must transfer all the right to hold collateral to the lender as soon as practicable after the guarantor refuses to repay debts on behalf of the obligor;

dd) Provide information and periodic or spontaneous reports for regulatory authorities in accordance with laws;

e) Other obligations agreed by contracting parties in accordance with legal regulations.

Article 27. Rights and obligations of the obligee

1. Obligee shall be vested with the right to:

a) Request the guarantor to fulfill their obligations as agreed upon with the obligor and the obligee as well as other relevant agreements in accordance with the guarantee certificate, credit guarantee contract, this Decree and relevant laws;

b) Request the guarantor to dispose of the right to receive and deal with assets being held as a security for the grant of guarantee in case obligor defaults on the debt owned to the guarantor and the obligee;

c) Initiate legal proceedings against those who default on terms and conditions agreed in the contract;

d) Request the guarantor to take on their guarantee obligations if the obligor does not pay or insufficiently pay their debts as prescribed in this Decree;

dd) Exercise other rights agreed by contracting parties in accordance with legal regulations.

2. Obligee's obligations:

a) Take on the obligations of a credit institution who grant loans to consumers and to the guarantor in accordance with the Law on credit institutions, Civil Code, this Decree and other applicable legal documents;

b) Take on obligations of the obligee prescribed in guarantee certificate as follows:

- obligations arising out of the obligee.

- written notices of the loan taken out by the obligor made by the obligee to the credit guarantee fund.

- If the obligee holds the collateral, the obligee must preserve it; transfer all collateral to the credit guarantee fund when the credit guarantee fund fulfill the guarantee obligations.

- Other obligations prescribed in the credit guarantee certificate.

c) Examine and supervise the utilization of loans, assets acquired from loans, repayment of loans made by obligors as an assurance about the loan utilization, assets acquired from loans used for the right purpose and loan repayment made under contractual terms and conditions agreed in the credit contract;

d) Provide all necessary documentary evidences for the loan disbursement for the guarantor; examine and supervise the loan utilization and assets acquired from the obligor’s loan whenever the discharge of guarantee obligations is required by the guarantor;

dd) Rigorously monitor the receipts of the obligor in order to speed up the loan collection;

e) Provide information, periodic or spontaneous reports on facts about secured loans for competent authorities;

g) Other obligations agreed by contracting parties in accordance with legal regulations.

Article 28. Rights and obligations of the obligor

1. Obligor shall be vested with the right:

a) Request the guarantor, obligee to secure their obligations as agreed upon in the credit guarantee contract and guarantee certificate;

b) Other rights agreed by contracting parties in accordance with legal regulations.

2. The obligor assumes the following obligations:

a) Provide sufficient information and supporting documents about the provision of guarantee at the request of the guarantor, obligor as well as bear responsibility for ensuring accuracy and legitimacy of such information and documents;

b) Be inspected and supervised by the guarantor, the obligee and the obligor;

c) Fulfill their commitments as agreed upon in the credit guarantee contract, and use the loan to serve the right purpose;

d) Pay fees for the credit guarantee to the guarantor in a sufficient and timely manner as prescribed in this Decree;

dd) If there is any change between the obligor and the obligee that affects obligation to the guarantee of the credit guarantee fund, the obligor shall give a written notice to the credit guarantee fund;

e) Reimburse the guarantor for the debts that the guarantor has paid on behalf of the obligor;

g) Other obligations agreed by contracting parties in accordance with legal regulations.

Chapter IV

FULFILLMENT OF CREDIT GUARANTEE OBLIGATIONS

Article 29. Process to fulfill commitments to the credit guarantee

1. After the obligor defaults on the debt owned to the obligee under the signed credit contract, the obligee shall notify the guarantor of the fulfillment of guarantee obligations as prescribed in Article 30 of this Decree.

2. The guarantor shall assess documents in the request for fulfillment of guarantee obligations made by the obligee as prescribed in Article 31 of this Decree.

3. The guarantor shall repay debts on behalf of the obligor in case of approval and refuse to fulfill the guarantee obligations in case of disapproval as prescribed in Article 32 of this Decree.

4. The obligor shall undertake to be indebted and reimburse the guarantor the debts which are repaid by the guarantor.

5. Deal with risks of improbability to recover the debts repaid on behalf of the obligor.

Article 30. Notices of credit guarantee obligations

1. By the expiry date on which the debt repayment shall be due, if the obligor fails to repay or insufficiently repay their debts to the obligee under the signed credit contract, the obligee must clarify the reasons for this insolvency and apply regulated measures to collect debts under the credit guarantee contract, guarantee certificate prescribed in Article 23 and Article 23 of this Decree.

2. If the obligor is still unable to repay their debts after all of debt collection measures prescribed in Clause 1 of this Article are failed, the obligee must send a written notice of the obligor’s default to the guarantor and request the guarantor to repay debts on behalf of the obligor under the credit guarantee contract and guarantee certificate, enclosed with proof that debt collection measures are applied but the obligor still be unable to repay the debts and documents related to the guarantee mentioned in the credit guarantee contract, guarantee certificate.

3. The Director of credit guarantee fund request the President to specify required documents in the request for debt repayment on behalf of the obligor made by the obligee.

Article 31. Verification of request for debt repayment on behalf of the obligor made by the obligee

1. Within 15 days after receiving a duly completed request from the obligee as prescribed in Article 30 of this Decree, the guarantor shall verify the request. Matters to be verified:

a) The sum that the obligee requests the guarantor to repay debts on behalf of the obligor;

b) The legitimacy of loan disbursement made by the obligee to the obligor before and after the issuance of guarantee certificate, in accordance with the Law on credit institutions and relevant regulations on the loan;

c) The obligee’s observance to commitments in the guarantee certificate and credit guarantee contract;

d) The fair market value of the collateral in a case where the obligee holds the collateral together with the guarantee and the loan as prescribed in this Decree.

2. In case of qualified guarantee as agreed upon in the guarantee certificate, within 10 days from the completion of request verification, the guarantor must issue an approval for the debt repayment on behalf of the obligor, clarifying the time when the guarantor must repay the debt on behalf of the obligor as committed in the guarantee certificate.

3. In case of unqualified guarantee as agreed upon in the credit guarantee contract, guarantee certificate and the case that the guarantor is entitled not to fulfill the guarantee obligations prescribed in Article 32 of this Decree, the guarantor shall notify the obligee of non-fulfillment of guarantee obligation and clarify reasons thereof.

Article 32. Cases the guarantor entitled not to fulfill the guarantee obligations

The guarantor is entitled not to fulfill the guarantee obligations in the following cases:

1. The obligee has not applied all measures to collect debts from the obligor as prescribed in Clause 1 Article 30 of this Decree.

2. The obligee violates laws on lending regulations of the lender during the extending of credit to the obligor, or fails to inspect, supervise or inspect, supervise not in a timely manner, leading to the consequence that the obligor uses the loan or asset derived from the loan not for the purposes mentioned in the credit contract.

3. Other cases agreed by the guarantor, the obligee and the obligor in the credit guarantee contract and guarantee certificate.

Article 33. Fulfillment of credit guarantee obligations

1. After sending a notice of approval for debt repayment on behalf of the obligor to the obligee prescribed in Clause 2 Article 30 of this Decree, the guarantor shall transfer money to the obligee on schedule specified in this notice. According to the financial situation, the guarantor may deal with the obligee to transfer the guaranteed amount at one time or multiple times.

2. The repayment sum includes principal and interests as agreed upon in the guarantee certificate, credit guarantee contract.

3. Before transferring the money, the guarantor and the obligee must reach an agreement to dispose of the collateral if the collateral is both put up for the loan and the guarantee as prescribed in this Decree.

Article 34. Indebtedness and reimbursement of guaranteed debts

1. The obligor shall undertake to be in debt with the guarantor:

a) After the credit guarantee fund transfers money to repay debts to the obligee, the obligor is obliged to undertake to be indebted and reimburse the guarantor the amount the guarantor has paid on behalf of the obligor

b) The obligor must repay debts to the guarantor, including: the principal to be repaid to the credit guarantee fund (including principal and interests that the credit guarantee fund has repaid to the lender), the forced interests up to 150% of lending interest rates within the term of loan at the time that the debt is accepted, unpaid guarantee fee, other costs that the guarantor has paid on behalf of the obligor. The forced indebtedness shall be made in form of a forced indebtedness contract;

c) According to the credit guarantee contract and guarantee certificate, the credit guarantee fund shall decide the term and interests for forced indebtedness, applied to the debts that the guarantor has paid. The term of the forced indebtedness does not exceed one third of the term of the guaranteed loan.

2. In special circumstances, the Director of credit guarantee fund shall request the President to seek approval from the President of People’s Committee of province for the exemption from or reduction in forced indebtedness interests on a case-by-case basis prescribed in Point b Clause 1 of this Article. The President of credit guarantee fund shall consider issuing the Regulation on indebtedness interest rates, exemption from or reduction in forced indebtedness interests after obtaining the approval from the President of People’s Committee of province.

3. If the obligor is not capable of repaying the due forced loan, the guarantor is entitled to apply responses to risks as prescribed in Article 37 of this Decree.

Article 35. Termination of obligations to guarantee loans

The guarantor’s obligations to guarantee loans shall be terminated in the following cases:

1. The obligor has fulfilled their obligations to make a full payment on debts to the obligee under the credit contract.

2. The guarantor has discharged their guarantee obligations as agreed upon with the obligee in the credit guarantee contract or guarantee certificate.

3. The loan guarantee shall be cancelled or replaced by other guarantee methods if the mutual agreement entered into by interested parties is reached.

4. Within 60 days from the issuance of guarantee certificate, if there is no amount of disbursement from the obligee to the obligor, the guarantee certificate shall cease to be effective.

5. The term of loan guarantee has expired.

6. The obligee has agreed to exempt the guarantor from fulfilling their guarantee obligations, or the guarantee obligations have been terminated in accordance with laws.

7. Pursuant to the agreement signed by contracting parties in compliance with laws.

Article 36. Debt classification, building up guarantee loss reserves

1. Debt classification: The credit guarantee fund shall classify debts that have been repaid on behalf of the obligor (the obligor is forced to be indebted) as prescribed by the State bank of Vietnam.

2. Building up guarantee loss reserves: The credit guarantee fund may build up the guarantee loss reserves and have them deducted from the operational costs as follows:

a) Build up an annual general guarantee loss reserve equal to 0.75% of its guarantee balance;

b) Build up particular guarantee loss reserves: According to the debt classification and annual revenues and expenditures, the credit guarantee fund shall build up particular guarantee loss reserves for debts that have been repaid on behalf of the obligor, the rate of reserve may not exceed the maximum reserve rates by debt groups applied to credit institutions.

3. The credit guarantee fund shall be entitled to use the guarantee loss reserves to cover debts arising from guarantee obligations which cannot be recovered after using risk insurance (if any). At the end of the year, if the balance of the guarantee loss reserve remains positive, it will be carried forward to the following year for further use.

If the guarantee loss reserve is not enough to cover guarantee risks arising in that year, the financial reserve fund shall be taken as prescribed in Article 43 of this Decree.

Article 37.

1. Rules for dealing with risks: The dealing with risks of the credit guarantee fund must respect the following rules:

a) In accordance with laws and regulations;

b) Minimize damage to the state and involve the credit guarantee fund, the obligee, the obligor and relevant agencies taking responsibilities for the guarantee and recovery of the debts as prescribed in this Decree and relevant laws.

2. Responses to risks of credit guarantee fund: debt structuring, charge-off, write-off (principal and interests), debt purchase and disposal of collateral.

3. Power to deal with risks:

a) The President of People’s Committee of province shall decide on: write-off (principal and interests), debt purchase under the book value;

b) The President of credit guarantee fund shall decide on charge-off and disposal of collateral;

c) The Director of credit guarantee fund shall decide the debt structuring.

4. The Ministry of Finance shall provide guidelines for responses to risks of the credit guarantee fund.

5. The recovered amount from guarantees after dealing with risks, including the amount recovered from the disposal of collateral shall be transferred to the guarantee loss reserve of the credit guarantee fund.

Chapter V

FINANCE, ACCOUNTING AND AUDIT, INFORMATION AND REPORT

Article 38. Financial regime, accounting, report

1. The credit guarantee fund shall comply with their financial regime, perform accounting and reporting tasks in accordance with this Decree and guidelines from the Ministry of Finance.

2. Fiscal year of Credit Guarantee Fund begins on January 01 and ends on December 31 every calendar year.

Article 39. Making annual financial plans

1. The credit guarantee fund shall make annual financial plans, plans for revenues, expenditures, procurement of fixed assets and then submit them to the President for consideration after obtaining the approval from the owner.

2. Process of approval and issuance of annual financial plans:

a) Before December 31, the President of credit guarantee fund shall send a report on annual financial plan to the People's Committee of province;

b) Before March 30 of the planning year, the People's Committee of province shall consider approving the annual financial plan for further implementation.

Article 40. Operational capital of credit guarantee fund

Operating capital of the credit guarantee fund is acquired from the following sources:

1. Owner’s equity:

a) Charter capital of the credit guarantee fund allocated by the local government budget;

b) Supplementary capital generated from the operating outcome of credit guarantee fund in accordance with legal regulations;

c) Capital generated from non-refundable grants, aids, contributions from Vietnamese and foreign entities to the credit guarantee fund;

d) Other state capital as per the law;

dd) Other sources of funds from owner’s equity as per the law.

2. Called-up capital: Capital raised from Vietnamese and foreign financial institutions and credit institutions as per the law and internal regulations of the fund conformable with the repayment capacity of the fund.

3. Other capital:

a) Capital trusted by local governments, local financial funds, Vietnamese and foreign entities (the trust) to execute the requests of the trustee as per the law and this Decree;

b) Other legal capital sources as stipulated by applicable laws.

Article 41. Principles for the capital management and utilization of a credit guarantee fund

1. The utilization of operating capital of the Credit Guarantee Fund must be based on the principle that it will serve the right purpose, ensure efficiency, capital and asset safety as follows:

a) Extending the credit guarantee to obligors in accordance with the provisions laid down in this Decree;

b) Capital expenditures and procurement of fixed assets for the operation of credit guarantee fund at the investment rate of less than 7% of charter capital of credit guarantee fund. The President shall promulgate regulations on construction and procurement of fixed assets in accordance with laws on investment and construction management.

2. The People's Committee of province requests People’s Council of province to consider providing extra charter capital for the credit guarantee fund as prescribed in this Decree and the Law on State Budget.

3. Idle sums of credit guarantee fund shall be used to serve the purpose of purchasing government bonds, treasury bills, treasury bonds, national bonds, government-guaranteed bonds, or deposited to saving accounts at credit institutions approved by the President of People’s Committee of province in each period following the rules of capital maintenance and development.

Article 42. Salary and allowances

The credit guarantee fund applies regulations on management of employees, salaries, remunerations, bonuses to employees and managers for single-member limited liability companies whose charter capital is wholly held by the state and in conformity with the operation nature and model of the fund as prescribed in this Decree.

Article 43. Financial results and distribution

1. Annual financial result of the credit guarantee fund means the difference between the total revenue earned and total expense incurred in the fiscal year.

2. After paying taxes and amounts payable to State budget, if the total revenue is greater than total expense, this difference shall be distributed in the order below:

b) Cover cumulative negative amounts until the statement time;

b) Deduct fines for violations imposed on the credit guarantee fund as per the law;

c) The remaining amount after deductions prescribed in Point a and Point b Clause 2 of this Article shall be deducted in the order below:

- Set aside 30% to build up the development investment fund.

- Set aside 20% to build up the financial reserve fund; the maximum rate may not exceed 25% of the charter capital.

- Set aside an amount to build up the welfare fund for employees, reward fund for managers in accordance with regulations applied to single-member limited liability companies whose charter capital is wholly held by the state. The Ministry of Finance shall provide guidelines for conditions for building up these funds and rates thereof.

- The remaining amount (if any) shall be supplemented to the development investment fund for providing extra charter capital for the credit guarantee fund under a decision made by the President of People’s Committee of province.

3. Use purpose of aforementioned funds

a) The development investment fund shall be used to supplement to the charter capital and execute development investment projects of the credit guarantee fund;

b) The financial reserve fund shall be used in the order of priority as follows:

- To cover loss and damage in terms of property, debts that cannot be recovered;

- Deal with credit guarantee risks after using up the guarantee loss reserve which is built up from the guarantee fees according to the decision of the President upon the request of the Director;

c) Manager reward fund:

- shall be used to reward the President, controllers, Director, Deputy Directors, chief accountants of the credit guarantee fund in a similar way to single-member limited liability companies whose charter capital is held by the state.

- The People's Committee of province shall decide the amounts of rewards according to the performance of the credit guarantee fund, upon the proposal of the President of credit guarantee fund.

d) The reward fund shall be used to give regular or surprise awards to individuals or groups of the credit guarantee fund who have technical initiatives or practice process bringing about effective performance of the credit guarantee fund; give awards to entities inside and outside the credit guarantee fund who make effective contributions to the operation of the fund;

dd) The welfare fund shall be used to spend on sports, cultural, welfare activities of staff of the credit guarantee fund; give regular or surprise subsidies to staff in difficulties; spend on construction and repair of welfare works.

The President, Director of the credit guarantee fund shall cooperate with the trade union of the credit guarantee fund in managing this fund in a transparent manner.

4. The credit guarantee fund shall issue the Regulation on management and use of these funds in accordance with this Decree for their internal application. After the People's Committee of province ratifies the Regulation, it shall manage the funds in a transparent manner.

5. If the total revenue is less than total expense (credit guarantee fund suffers a loss in the financial year), the credit guarantee fund is entitled to carry the loss forward to the following year, the period for carrying loss may not exceed 5 years from the year succeeding the year of loss. If the credit guarantee fund fails to carry all of losses forward after 5 years, it shall request the President of People’s Committee of province to consider approving the capital reduction, operating capital allocation, restructuring, dissolution or bankruptcy of the credit guarantee fund as prescribed in this Decree and relevant laws.

Article 44. Communication and reporting regime

1. The credit guarantee fund shall:

a) Prepare and send biannual reports to the People's Committee of province, the Department of Finance, the branch of the State Bank of province where the credit guarantee fund operates;

b) Prepare and send annual reports to the Ministry of Finance, the State Bank of Vietnam and the Ministry of Planning and Investment.

2. Biannual and annual reports prescribed in Clause 1 of this Article, including:

a) Financial statements, including: balance sheets; performance reports; cash flow statements; equity fluctuation reports; notes to financial statements as per the law; revenue and expenditure reports; reports on distribution of revenues and expenditures and use of funds in accordance with instructions of the Ministry of Finance;

b) Professional operations reports: Financial performance reports of projects granted guarantees;

c) Annual financial audit reports.

3. Time limit for sending reports:

a) Biannual reports must be sent within 30 days from the end of the 6-month period;

b) The annual report must be sent within 90 days from the end of the fiscal year; the annual financial audit report of the credit guarantee fund made by the independent audit organization must be sent within 120 days from the end of the fiscal year.

4. In an ad hoc circumstance, the credit guarantee fund shall be responsible and obliged to provide information and reports for competent authorities upon requests.

5. On an annual basis, the People's Committee of province shall send a report on financial performance of the credit guarantee fund to the People’s Council of province for supervision. Contents of report:

a) Financial performance of the credit guarantee fund, including: turnover, total guaranteed debt, guarantee sector, debt repayment for the obligor;

b) Financial resources of the credit guarantee fund: operational sources of funds, revenues and expenditures, loan loss provision;

c) Evaluation and claims in terms of operation of the credit guarantee fund.

Article 45. Audit and financial statement disclosure

1. An annual financial report prepared by the credit guarantee fund must be audited by an independent auditor or state audit office and published in accordance with applicable laws.

2. Annually, the controller of credit guarantee fund shall request the President to select an independent audit organization incorporated and operating in Vietnam to make a financial audit of the credit guarantee fund.

3. The controller of the credit guarantee fund shall inspect and control the implementation of financial regulations by the credit guarantee fund as planned and send a report to the President of credit guarantee fund.

Chapter VI

SUPERVISION AND PERFORMANCE ASSESSMENT OF CREDIT GUARANTEE FUND

Article 46. Authorities in charge of supervising and assessing performance of credit guarantee fund

1. The People's Committee of province shall supervise and assess the performance of the credit guarantee fund in a extensive manner.

2. The Department of Finance shall take charge and cooperate with branches of the State Bank of Vietnam of provinces and cities and relevant units in the administrative divisions in assisting the People's Committees of provinces to supervise and assess the performance of the credit guarantee fund.

Article 47. Supervision

1. Supervision of capital preservation.

2. Supervision of management and use of capital and assets

a) Capital raising;

b) Capital use;

c) Extending of credit guarantee in accordance with this Decree and internal regulations of the fund;

d) Property management.

3. Supervision of performance of the credit guarantee fund

a) Implementation of the fund’s operational plan;

b) Operational performance of the fund: income, financial performance of the fund;

c) Distribution of financial results and building up of funds.

4. Supervision of pay regime of the fund.

5. Other supervisions as required by the People's Committee of province.

Article 48. Bases for supervision and supervision methods

1. Regulations on organization and operation of credit guarantee fund in this Decree and its guiding documents.

2. Charter of organization and operation and other operation regulations of the credit guarantee fund issued by competent authorities.

3. Annual operation plan of the credit guarantee fund approved by the competent authorities.

4. Annual financial reports of the credit guarantee fund audited by independent entities and approved by the President of credit guarantee fund; biannual and annual financial statements; regular and surprise reports as required by the People's Committee of province or regulatory agencies.

5. Inspection and audit results at the credit guarantee fund published by specialized agencies and sent to the People's Committee of province.

6. Relevant information and materials as per the law.

7. Financial supervision methods shall be carried out in person or directly through reports sent by the credit guarantee fund to discover financial risks and financial management limitations in a timely manner and give warning and apply remedial measures.

Article 49. Assessing performance of credit guarantee fund

1. Criteria for annual performance assessment of the credit guarantee fund, including:

a) Criterion 1: Growth of turnover of credit guarantees;

b) Criterion 2: Rate of debts repaid on behalf of obligors;

c) Criterion 3: Rate of annual recovery of forced debts;

d) Criterion 4: Total revenue minus total expense;

dd) Criterion: The extent of compliance with regulations on investment, management and use of capital and property of the fund, obligations to the state budget, financial statement regime.

2. Objective reasons

When calculating criteria for performance assessment of the credit guarantee fund prescribed in Clause 1 hereof, the credit guarantee fund may exclude objective reasons in terms of:

a) Natural disasters, fire, epidemics, wars and other force majeure events;

b) Changes in credit guarantee fee policies that affect financial performance of the fund or the fee remission subject to decision of competent authorities in accordance with this Decree.

3. The Ministry of Finance shall provide guidelines for methods of evaluating performance and rating the credit guarantee fund as prescribed in this Article.

4. Annual performance assessment reports of the credit guarantee fund shall be sent to the Ministry of Finance, the State Bank of Vietnam, the Ministry of Planning and Investment before May 31 of the following year for state management purpose and as per the law.

Chapter VII

RESTRUCTURING, DISSOLUTION, AND BANKRUPTCY OF CREDIT GUARANTEE FUND

Article 50. Restructuring and dissolution of credit guarantee fund

According to the performance assessment of credit guarantee fund, the People's Committee of province shall decide:

1. restructuring of administration apparatus and operations of the credit guarantee fund whose organization and operation has not complied with this Decree and applicable laws and has not operated effectively.

2. Dissolution of the credit guarantee fund which has been restructured as prescribed in Clause 1 of this Article but has operated ineffectively, not in conformity with the establishment objectives, and not in accordance with laws and regulations and falls under the cases of compulsory dissolution prescribed in Article 51 of this Decree.

Article 51. Cases of compulsory dissolution

The People's Committee of province shall dissolve a local credit guarantee fund in any of the following cases:

1. It has not adequate minimum charter capital as prescribed in Clause 4 Article 64 and Clause 6 Article 6 of this Decree.

2. The ratio of outstanding credit guarantee to the actual charter capital of the credit guarantee fund on December 31 is less than 10% in 5 consecutive years from effective date of this Decree.

3. Nonperforming loan ratio of the credit guarantee fund to the actual charter capital is greater than 50% in 3 consecutive years.

Article 52. Dissolution council of credit guarantee fund

1. The People's Committee of province shall consider establishing a dissolution council to deal with the dissolution of the credit guarantee fund. The dissolution council shall advise the People's Committee of province on dissolution plan and dissolution of the credit guarantee fund.

2. The dissolution council is composed of:

a) President of dissolution council who is the Deputy President of People’s Committee of province;

b) Leaders of the Department of Finance, the Department of Planning and Investment, the Department of Labor, War Invalids and Social Affairs;

c) Leader of local branch of the State Bank of Vietnam;

d) The President, controllers of the credit guarantee fund;

dd) Representatives of relevant agencies (as deemed appropriate) subject to decision of the local government.

Article 53. Processes of dissolution of credit guarantee fund

1. If the credit guarantee fund must be dissolved as prescribed in this Decree, the People's Committee of province shall establish a dissolution council as prescribed in Article 52 of this Decree. The dissolution council shall formulate a dissolution plan, and request the People's Committee of province to send an advisory opinion request to People’s Council of province before dissolution decision. The dissolution plan shall contain:

a) The independent audit organization which evaluates financial situation and real value of charter capital, except for the case that there is a financial statement audited by an independent organization within 6 months before the dissolution decision;

b) Plan for liquidation of assets and actions against charter capital, credit guarantees which are granted to SMEs and repayment of debts incurred by the credit guarantee fund;

c) Plan for actions against obligations arising out of the labor contract;

d) Termination of all rights and interests of the credit guarantee fund.

2. After the dissolution plan is approved by the People’s Council of province, the People's Committee of province shall decide the dissolution of the fund as prescribed in Article 54 of this Decree.

3. After receiving such a dissolution decision:

a) The credit guarantee fund shall implement Article 55 of this Decree;

b) The dissolution council shall implement Article 56 of this Decree;

4. The dissolution council shall automatically terminates its operation when the credit guarantee fund completes procedures for dissolution as prescribed in this Decree and relevant laws.

5. The dissolution period of credit guarantee fund is up to 2 years from the effective date of the dissolution decision. In necessary cases, the People's Committee of province may give an extension of dissolution period up to 1 year.

Article 54. Dissolution decision of credit guarantee fund

1. Dissolution decision of credit guarantee fund must at least contain:

a) Name, headquarters of the dissolved credit guarantee fund;

b) Dissolution reasons;

c) Time limit, procedures for contract finalization and repayment of debts incurred by the credit guarantee fund; time limit for debt repayment and contract finalization is 1 year from the date on which the dissolution decision is made;

d) Recovery of debts repaid on behalf of obligors before due or transfer of these debts to specialized units for further monitoring and recovery;

dd) Plan for actions against obligations arising out of the labor contract.

2. Within a period of 15 working days that begins on the issuing date of dissolution decision, the People’s Committee of province shall notify the Ministry of Finance, the State bank of Vietnam and the Ministry of Planning and Investment as well as publicly announce the dissolution of Credit Guarantee Fund through locally and centrally-governed means of mass media.

Article 55. Responsibilities of credit guarantee fund after dissolution decision

1. From the effective date of the dissolution decision, the credit guarantee fund shall initiate the following tasks:

a) Terminate the credit guarantee and relevant activities;

b) Close accounting books; stocktaking of assets; reconciliation of receivable and payable debts, make financial statements to the effective date of dissolution decision;

c) Make a list of deposits at financial institutions of the credit guarantee fund; liabilities, a list of obligors and receivable principals and interests (classified as recoverable and irrecoverable debts); raised capital of the credit guarantee fund;

d) Send a request to the tax authority to confirm tax obligations which are discharged by the fund.

2. Within 30 days, from the effective date of the dissolution decision, the credit guarantee fund must hand over the dissolution council:

a) Financial statements, accounting records and relevant documents related to the dissolution; a list of credit guarantees and debt repayment on behalf of obligors;

b) All of assets under legal ownership, management and use of the fund (including assets which cannot be recovered).

Article 56. Responsibilities of dissolution council after receiving dissolution decision

1. After receiving a dissolution decision, the dissolution council must:

a) Revoke the fund’s seal for dissolution purpose;

b) Carry out the dissolution process according to the approved plan;

c) Within 7 days from the completion of dissolution, the dissolution council report on the dissolution result to the People's Committee of province.

2. The dissolution council shall be entitled to use the seal of the credit guarantee fund for dissolution purpose and request regulatory agencies to support it related to the forfeiture of assets.

Article 57. Bankruptcy of credit guarantee fund

The bankruptcy of credit guarantee funds are stipulated in the Law on Bankruptcy and its guiding documents.

Chapter VIII

IMPLEMENTATION

Article 58. Responsibilities of the Ministry of Finance

1. Provide guidelines for financial management, accounting system and regulations on dealing with risks of credit guarantee funds as prescribed in this Decree.

2. Take charge and cooperate with ministries, agencies, People's Committees of provinces and relevant entities in amending legal documents on organization and operation of credit guarantee funds, and then promulgating them or submitting them to competent authorities for promulgation.

3. Cooperate with ministries, agencies, People's Committees of provinces in monitoring, reviewing and evaluating performance of credit guarantee funds as prescribed in this Decree.

Article 59. Responsibilities of the State Bank of Vietnam

1. Provide guidelines, inspect and supervise credit institutions’ cooperation with credit guarantee funds in performing credit guarantees as prescribed in this Decree.

2. Guide credit institutions to determine lending interest rates for SMEs to be guaranteed credit guarantee funds as prescribed in this Decree, ensure that the loan application fees (including guarantee fees) are conformable with SMEs.

3. Cooperate with the Ministry of Finance in amending policies and perform credit guarantees as prescribed in this Decree.

Article 60. Responsibilities of the Ministry of Planning and Investment

Cooperate with the Ministry of Finance and relevant Ministries and agencies in formulating and improving legal framework in terms of organization and operation of the fund and implementation of this Decree as per the law.

Article 61. Responsibilities of the Ministry of Labor, War Invalids and Social Affairs

Provide guidelines for management of employees, salaries, remuneration, rewards for employees, managers of credit guarantee funds prescribed in Article 42 of this Decree.

Article 62. Responsibilities of People’s Council and Peoples’ Committee of province

1. Responsibilities of People’s Council of province:

a) Approve a scheme for establishment of credit guarantee fund as prescribed in Article 6 of this Decree; ratify policies for dissolution and bankruptcy of credit guarantee funds;

b) Inspect and supervise the implementation and management of local credit guarantee funds.

2. Responsibilities of People’s Committee of province:

a) Decide establishment, restructuring, dissolution and bankruptcy of credit guarantee funds as prescribed in this Decree and relevant laws;

b) Allocate adequate charter capital to credit guarantee funds as prescribed in this Decree and decisions on charter capital adjustment during the operation of credit guarantee funds;

c) Promulgate, amend charter of organization and operation of credit guarantee funds; comply with charter of organization and operation of credit guarantee funds;

d) Regulate regime for recruitment, appointment, re-appointment, dismissal, rewards, disciplinary actions, managers of credit guarantee funds as prescribed in this Decree;

dd) Promulgate working regulations of controllers of credit guarantee funds;

e) Inspect and supervise operations of credit guarantee funds in an extensive manner;

g) Send annual or ad hoc reports to the Ministry of Finance, the Ministry of Planning and Investment and the State Bank of Vietnam on financial performance of credit guarantee funds as prescribed in this Decree;

h) Propose measures for eliminating difficulties in operation of credit guarantee funds; propose amendments to policies for credit guarantee funds;

i) Send annual reports on performance of credit guarantee funds to People’s Council of province, propose measures for eliminating difficulties and improve financial performance in operation of credit guarantee funds within their competence;

k) Other matters under responsibilities of the People's Committee of province in accordance with this Decree and relevant laws.

Article 63. Implementation

This Decree comes into force as of date of signing and supersedes Decision No. 2013/QD-Ttg dated October 15, 2013 of the Prime Minister on promulgation of Regulation on establishment, organization and operation of credit guarantee funds for SMEs and relevant documents.

Article 64. Transitional provisions

1. With regard to execution of contracts, guarantee certificates and commitments signed between the credit guarantee fund, the obligee and the obligor before effective date of this Decree:

Any guarantee contract, guarantee certificate and other agreements signed by a credit guarantee fund and a lender before effective date of this Decree shall keep effective as prescribed Prime Minister’s Decision No. 58/2013/QD-Ttg dated October 15, 2013 on promulgating regulation on establishment, organization and operation of credit guarantee funds for SMEs.

2. With respect to the case in which the credit guarantee fund and credit institutions have agreed on the guarantee contract and loan guarantee certificate after the effective date of this Decree, provisions laid down in this Decree must be strictly observed.

3. The balance of professional development investment funds prescribed in Decision No. 58/2013/QD-TTg dated October 15, 2013 of the Prime Minister promulgating regulation on establishment, organization and operation of credit guarantee funds for SMEs is transferred to development investment funds as prescribed in Article 43 of this Decree.

4. Regarding existing credit guarantee funds: Within 3 years from effective date of this Decree, existing credit guarantee funds shall review and restructure their organizational apparatus and supplement charter capital as prescribed in this Decree.

Article 65. Responsibilities for guidelines and implementation of Decree

Ministers, Heads of ministerial-level agencies, Heads of Governmental agencies, the Presidents of People’s Committees of provinces, the Presidents of People’s Councils of provinces, Presidents and Directors of credit guarantee funds and entities shall implement this Decree./.

 

ON BEHALF OF THE GOVERNMENT PRIME MINISTER Nguyen Xuan Phuc