VIETNAM Law and Practice Contributed by: Chuyen Hong Huu Le, Tan Nhat Truong Phan and Tu Anh Tran, Tilleke & Gibbins
3.1.2 Effect of Exchange Controls or Government Consents Under Vietnamese law, a foreign loan must be made in a foreign currency, except in limited circumstances. Vietnamese borrowers may purchase foreign cur - rency at a licensed credit institution for the purpose of paying loan principal, interest and related fees. At the time of application for outward remittance of for - eign currency to repay the foreign loan, the borrower must submit documentary evidence with respect to the remittance (eg, loan agreement, relevant invoices, governmental approval and any other relevant docu - ments or instruments). Medium and long-term loans, which have terms of over one year and short-term loans whose terms are extended to more than one year or on which there remains outstanding principal (including outstand - ing interest included in the principal) on the one year anniversary of the first withdrawal must be registered with the Central State Bank of Vietnam (SBV) or the relevant provincial branch of SBV. 3.1.3 Granting of Security to Foreign Lenders Subject to complying with the applicable laws, bor - rowers are generally permitted to grant security to for - eign lenders. However, a foreign lender or mortgagor cannot directly take mortgage over the real properties (including land and/or buildings attached to land) or use a Vietnamese bank as a security agent. 3.1.4 Downstream, Upstream and Cross-Stream Guarantees Subject to complying with the applicable laws, down - stream, upstream and cross-stream guarantees by a Vietnamese borrower in favour of lenders could be permitted. In addition, these guarantees could be considered related party transactions and the relevant corporate approvals may be required. Security over land use rights, assets attached to the land, aircraft or vessels must be registered with the relevant registrars to be valid and enforceable against third parties.
3.1.5 Lenders’ Share in Security Over Domestic SPVs Subject to any applicable foreign ownership restric - tions, a pledge or mortgage over the shares of a domestic special purpose vehicle that owns the financed aircraft is advisable and recognised under Vietnamese laws. 3.1.6 Negative Pledges The parties may agree upon a negative pledge under - taking in a loan or facility agreement, to the extent that the agreement or undertaking does not contradict the fundamental principles of Vietnamese law. 3.1.7 Intercreditor Arrangements Subject to complying with the applicable laws, there are no material restrictions or requirements imposed on intercreditor arrangements. 3.1.8 Syndicated Loans The concept of agency and the role of an agent (such as the facility agent) under a syndicated loan are rec - ognised under Vietnamese law. 3.1.9 Debt Subordination Vietnamese law does not specifically address meth - ods of debt subordination, except for subordinated debts issued by credit institutions or banks. The parties can generally agree upon subordination. Vietnamese law also provides that the order of prior - ity for payment between the jointly secured parties may be changed if the jointly secured parties reach an agreement on changing the order of priority for payment between themselves. 3.1.10 Transfer/Assignment of Debts Under Foreign Laws Subject to complying with the applicable laws, the transfer or assignment of all or part of an outstanding debt under an English or New York law-governed loan could be permissible and recognised in Vietnam. 3.1.11 Usury/Interest Limitation Laws SBV is generally entitled to fix or impose limits on foreign lending interest rates. However, no limit has been set.
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