In Vietnam, a cross-border loan (foreign loan) having a term of more than one year should be registered with the State Bank of Vietnam (“SBV”).

A recent circular of the SBV (dated 15 September 2014, Circular No. 25/2014/TT-NHNN on procedures for registration of non-government guaranteed foreign loans borrowed by enterprises) requires the amendment of the registration of a foreign loan with the SBV before any unscheduled repayment of such loan may be effected. Based on this new circular, a repayment by the local borrower upon an ‘Event of Default’ (loan documents generally require automatic repayment in that case) would be necessarily unscheduled and therefore require the prior amendment of the registration of the outstanding foreign loan by the SBV. This new circular is silent on whether it applies to existing foreign loans, and would therefore normally do.

As you know the amendment of the registration of a foreign loan agreement requires both an active application by the local borrower and the actual amendment of the registration by the SBV. 

Hence we wanted to alert you on this new requirement that could potentially be problematic for foreign lenders in case of unscheduled repayment, specially in case of an ‘Event of Default’.